Rowan Co. purchases 100 common shares (40%) of JBI Corp. as a long-term investment for $500,000 cash on July 1. JBI paid $5,000 in total cash dividends on November 1 and reported net income of $100,000 for the year. Prepare Rowan’s entries to record (1) the purchase of JBI shares, (2) the receipt of its share of JBI dividends, and (3) the December 31 year-end adjustment for its share of JBI net income.
Rowan Co. purchases 100 common shares (40%) of JBI Corp. as a long-term investment for $500,000 cash on July 1. JBI paid $5,000 in total cash dividends on November 1 and reported net income of $100,000 for the year. Prepare Rowan’s entries to record (1) the purchase of JBI shares, (2) the receipt of its share of JBI dividends, and (3) the December 31 year-end adjustment for its share of JBI net income.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Rowan Co. purchases 100 common shares (40%) of JBI Corp. as a long-term investment for $500,000
cash on July 1. JBI paid $5,000 in total cash dividends on November 1 and reported net income of
$100,000 for the year. Prepare Rowan’s entries to record (1) the purchase of JBI shares, (2) the receipt of
its share of JBI dividends, and (3) the December 31 year-end adjustment for its share of JBI net income.
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