On January 1, 2007, Jondy Ltd acquires 5% of the voting shares of Montag Inc. for 785,000. The investment is classified as available for sale. The Montag shares do not trade in an active market. Jondy Ltd has a December 31 year-end. During the year ending Deccember 31, 2007, Montag has net income of 700,000 and pays dividends of 500,000. During the year ending December 31, 2008, Montag has net income of nil but continues to pay dividend of 500,000. Provide journal entries to record the preceding information on the books of Jondy Ltd.
On January 1, 2007, Jondy Ltd acquires 5% of the voting shares of Montag Inc. for 785,000. The investment is classified as available for sale. The Montag shares do not trade in an active market. Jondy Ltd has a December 31 year-end. During the year ending Deccember 31, 2007, Montag has net income of 700,000 and pays dividends of 500,000. During the year ending December 31, 2008, Montag has net income of nil but continues to pay dividend of 500,000. Provide journal entries to record the preceding information on the books of Jondy Ltd.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2007, Jondy Ltd acquires 5% of the voting shares of Montag Inc. for 785,000. The investment is classified as available for sale. The Montag shares do not trade in an active market. Jondy Ltd has a December 31 year-end. During the year ending Deccember 31, 2007, Montag has net income of 700,000 and pays dividends of 500,000. During the year ending December 31, 2008, Montag has net income of nil but continues to pay dividend of 500,000. Provide
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