Instructions х At a total cost of $6,030,000, Herrera Corporation acquired 224,000 shares of Tran Corp. common stock as a long- term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 800,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. Required: A. Journalize the entries by Herrera Corporation on December 31 to record the following information (refer to the Chart of Accounts for exact wording of account titles): 1. Tran Corp. reports net income of $933,000 for the current period. 2. A cash dividend of $0.27 per common share is paid by Tran Corp. during the current period. B. Why is the equity method appropriate for the Tran Corp. investment?
Instructions х At a total cost of $6,030,000, Herrera Corporation acquired 224,000 shares of Tran Corp. common stock as a long- term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 800,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. Required: A. Journalize the entries by Herrera Corporation on December 31 to record the following information (refer to the Chart of Accounts for exact wording of account titles): 1. Tran Corp. reports net income of $933,000 for the current period. 2. A cash dividend of $0.27 per common share is paid by Tran Corp. during the current period. B. Why is the equity method appropriate for the Tran Corp. investment?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Can you please help me with part A
Transcribed Image Text:Instructions
х
At a total cost of $6,030,000, Herrera Corporation acquired 224,000 shares of Tran Corp. common stock as a long-
term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has
800,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation.
Required:
A. Journalize the entries by Herrera Corporation on December 31 to record the following information (refer
to the Chart of Accounts for exact wording of account titles):
1. Tran Corp. reports net income of $933,000 for the current period.
2. A cash dividend of $0.27 per common share is paid by Tran Corp. during the current period.
B. Why is the equity method appropriate for the Tran Corp. investment?
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