On January 4, Year 1, Ferguson Company purchased 168,000 shares of Silva Company directly from one of the founders for a price of $27 per share. Silva has 560,000 shares outstanding, including the Daniels shares. On July 2, Year 1, Silva paid $717,000 in total dividends to its shareholders. On December 31, Year 1, Silva reported a net income of $963,000 for the year. Ferguson uses the equity method in accounting for its investment in Silva. Required: A. Provide the Ferguson Company journal entries for the transactions involving its investment in Silva Company during Year 1. Refer to the Chart of Accounts for exact wording of account titles. B. Determine the December 31, Year 1, balance of the investment in Silva Company stock account.

On January 4, Year 1, Ferguson Company purchased 168,000 shares of Silva Company directly from one of the founders for a price of $27 per share. Silva has 560,000 shares outstanding, including the Daniels shares. On July 2, Year 1, Silva paid $717,000 in total dividends to its shareholders. On December 31, Year 1, Silva reported a net income of $963,000 for the year. Ferguson uses the equity method in accounting for its investment in Silva. Required: A. Provide the Ferguson Company journal entries for the transactions involving its investment in Silva Company during Year 1. Refer to the Chart of Accounts for exact wording of account titles. B. Determine the December 31, Year 1, balance of the investment in Silva Company stock account.

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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