On January 4, Year 1, Ferguson Company purchased 64,000 shares of Silva Company directly from one of the founders for a price of $54 per share. Silva has 200,000 shares outstanding, including the Daniels shares. On July 2, Year 1, Silva paid $157,000 in total dividends to its shareholders. On December 31, Year 1, Silva reported net income of $575,000 for the year. Ferguson uses the equity method in accounting for its investment in Silva. a. Provide the Ferguson Company journal entries for the transactions involving its investment in Silva Company during Year 1. Year 1, Jan. 4 Year 1, July 2 Year 1, Dec. 31 b. Determine the December 31, Year 1, balance of Investment in Silva Company Stock.
On January 4, Year 1, Ferguson Company purchased 64,000 shares of Silva Company directly from one of the founders for a price of $54 per share. Silva has 200,000 shares outstanding, including the Daniels shares. On July 2, Year 1, Silva paid $157,000 in total dividends to its shareholders. On December 31, Year 1, Silva reported net income of $575,000 for the year. Ferguson uses the equity method in accounting for its investment in Silva. a. Provide the Ferguson Company journal entries for the transactions involving its investment in Silva Company during Year 1. Year 1, Jan. 4 Year 1, July 2 Year 1, Dec. 31 b. Determine the December 31, Year 1, balance of Investment in Silva Company Stock.
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter7: Receivables And Investments
Section: Chapter Questions
Problem 7.13E
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![Equity Method for Stock Investment
On January 4, Year 1, Ferguson Company purchased 64,000 shares of Silva Company directly from one of the founders for a price of $54 per share. Silva has 200,000
shares outstanding, including the Daniels shares. On July 2, Year 1, Silva paid $157,000 in total dividends to its shareholders. On December 31, Year 1, Silva reported a
net income of $575,000 for the year. Ferguson uses the equity method in accounting for its investment in Silva.
a. Provide the Ferguson Company journal entries for the transactions involving its investment in Silva Company during Year 1.
Year 1, Jan. 4
Year 1, July 2
Year 1, Dec. 31
b. Determine the December 31, Year 1, balance of Investment in Silva Company Stock.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe513d118-47da-4d2c-9045-463c8cef289a%2Fe6272707-883b-4ba0-9fd5-9037f58c0ef2%2Fi1ef32n_processed.png&w=3840&q=75)
Transcribed Image Text:Equity Method for Stock Investment
On January 4, Year 1, Ferguson Company purchased 64,000 shares of Silva Company directly from one of the founders for a price of $54 per share. Silva has 200,000
shares outstanding, including the Daniels shares. On July 2, Year 1, Silva paid $157,000 in total dividends to its shareholders. On December 31, Year 1, Silva reported a
net income of $575,000 for the year. Ferguson uses the equity method in accounting for its investment in Silva.
a. Provide the Ferguson Company journal entries for the transactions involving its investment in Silva Company during Year 1.
Year 1, Jan. 4
Year 1, July 2
Year 1, Dec. 31
b. Determine the December 31, Year 1, balance of Investment in Silva Company Stock.
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