Question #1 On April 1, 2020, Jenson Ltd., a private enterprise, acquired 2,500 shares of Lam Corp. for $50,000. This investment represents a 18% interest in Lam Corp. and Jenson Ltd. uses the cost method to record the investment. On October 31, 2020, Lam Corp. paid a $42,000 dividend to its shareholders. At March 31, 2021, Lam Corp.'s shares were valued at $45 per share and Lam Corp. reported net income of $145,000 for the year. On May 15, 2021, Jenson Ltd. sold the shares for $20,000. Both Jenson Ltd. and Lam Corp. have March 31, 2021 year-ends. Required: Prepare dated journal entries for the investment on the acquiring company's books from acquisition to disposal. Ignore income taxes. Journal entry descriptions are optional.
Question #1 On April 1, 2020, Jenson Ltd., a private enterprise, acquired 2,500 shares of Lam Corp. for $50,000. This investment represents a 18% interest in Lam Corp. and Jenson Ltd. uses the cost method to record the investment. On October 31, 2020, Lam Corp. paid a $42,000 dividend to its shareholders. At March 31, 2021, Lam Corp.'s shares were valued at $45 per share and Lam Corp. reported net income of $145,000 for the year. On May 15, 2021, Jenson Ltd. sold the shares for $20,000. Both Jenson Ltd. and Lam Corp. have March 31, 2021 year-ends. Required: Prepare dated journal entries for the investment on the acquiring company's books from acquisition to disposal. Ignore income taxes. Journal entry descriptions are optional.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question #1
On April 1, 2020, Jenson Ltd., a private
enterprise, acquired 2,500 shares of
Lam Corp. for $50,000. This
investment represents a 18% interest in
Lam Corp. and Jenson Ltd. uses the
cost method to record the investment.
On October 31, 2020, Lam Corp. paid
a $42,000 dividend to its shareholders.
At March 31, 2021, Lam Corp.'s shares
were valued at $45 per share and Lam
Corp. reported net income of $145,000
for the year. On May 15, 2021, Jenson
Ltd. sold the shares for $20,000. Both
Jenson Ltd. and Lam Corp. have
March 31, 2021 year-ends.
Required:
Prepare dated journal entries for the
investment on the acquiring
company's books from acquisition to
disposal. Ignore income taxes. Journal
entry descriptions are optional.
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