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Lee, Inc. acquired 30% of Polk Corp's voting stock on January 1, year 1, for $100,000. During year 1, Polk earned $40,000 and paid dividends of $25,000. Lee's 30% interest in Polk gives Lee the ability to exercise significant influence over Polk's operating and financial policies. During year 2. Polk earned $50,000 and paid dividends of $15,000 on April 1 and $15,000 on October 1. On July 1, year 2, Lee sold half of its stock in Polk for $66,000 cash. The carrying amount of this investment in Lee's December 31, year 1 Balance Sheet should be Ⓒ$112.000. $115,000. $104,500. $100,000

Lee, Inc. acquired 30% of Polk Corp's voting stock on January 1, year 1, for $100,000. During year 1, Polk earned $40,000 and paid dividends of $25,000. Lee's 30% interest in Polk gives Lee the ability to exercise significant influence over Polk's operating and financial policies. During year 2. Polk earned $50,000 and paid dividends of $15,000 on April 1 and $15,000 on October 1. On July 1, year 2, Lee sold half of its stock in Polk for $66,000 cash. The carrying amount of this investment in Lee's December 31, year 1 Balance Sheet should be Ⓒ$112.000. $115,000. $104,500. $100,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Lee, Inc. acquired 30% of Polk Corp's voting stock on January 1, year 1, for $100,000. During year 1, Polk earned $40,000 and paid dividends of $25,000. Lee's 30 % interest in Polk gives Lee the ability to exercise significant influence over Polk's operating and financial policies. During year 2, Polk earned $50,000 and paid dividends of $15,000 on April 1 and $15,000 on October 1. On July 1, year 2, Lee sold half of its stock in Polk for $66,000 cash. The carrying amount of this investment in Lee's December 31, year 1 Balance Sheet should be Ⓒ$112,000. $115,000. $104,500. $100,000.
Transcribed Image Text:Lee, Inc. acquired 30% of Polk Corp's voting stock on January 1, year 1, for $100,000. During year 1, Polk earned $40,000 and paid dividends of $25,000. Lee's 30 % interest in Polk gives Lee the ability to exercise significant influence over Polk's operating and financial policies. During year 2, Polk earned $50,000 and paid dividends of $15,000 on April 1 and $15,000 on October 1. On July 1, year 2, Lee sold half of its stock in Polk for $66,000 cash. The carrying amount of this investment in Lee's December 31, year 1 Balance Sheet should be Ⓒ$112,000. $115,000. $104,500. $100,000.
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