Sadavir Co. purchased 100% of the outstanding common stock of Errinwright, Inc. on 1/1/2X for $500,000 in cash and stock. Sadavir Co. accounts for the income of Errinwright, Inc., using the Cost Method, and during the year Errinwright, Inc. reported Net Income of $100,000 and declared and paid dividends of $45,000. Assuming no other transaction between the two companies, the balance in the "Investment Income from Errinwright, Inc." on the books of Sadavir Co. on 12/31/2X will be: Question 5 options: a) $100,000 b) $25,000 c) $30,000 $45,000
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- GodoMarigold Corporation purchased 440 shares of Sherman Inc. common stock for $14,400 (Marigold does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $37.00 per share.Prepare Marigold's journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.)Blue Spruce Corporation purchased 300 common shares of Burke Inc. for $22,830 and accounted for them using FV-OCI. During the year, Burke paid a cash dividend of $3.45 per share. At year end, Burke shares had a fair value of $72.50 per share. (a) Prepare Blue Spruce's journal entry to record the purchase of the investment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles and Explanation Debit Credit
- Braviary Corp. acquired a 70% interest in Vullaby Company in 20A. For the year ended December 31, 20A and 20B, Vullaby Company reported an income of P160,000 and P180,000, respectively. During 20A, Vullaby sold merchandise to Braviary Corp. for P20,000 at a profit of P4,000. The merchandise was later resold by Braviary Corp. to outsider for P30,000 during 20B. For consolidation purposes, what is the minority interest's share of Vullaby's net income for 20A and 20B, respectively. * A. P49,200 and P52,800 B. Answer not given C. P53,200 and P50,000 D. P46,800 and P55,200 E. P48,000 and P54,000Sunland Corporation purchased 370 shares of Sherman Inc. common stock for $ 13,100 ( Sunland does not have significant influence). During the year, Sherman paid a cash dividend of $ 3.00 per share. At year-end, Sherman stock was selling for $ 37.50 per share.Prepare Sunland's journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation Debit Credit (a) enter an account title to record the purchase of the investment enter a debit amount enter a credit amount enter an account title to record the purchase of the investment enter a debit amount enter a credit amount (b) enter an account title to record…Riverbed Corporation purchased 400 shares of Sherman Inc. common stock for $12,900 (Riverbed does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $37.00 per share. Prepare Riverbed journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (List all debit entries before credit entries, Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)
- On January 2, 20Y7, Mikedes Company acquired 30% of the outstanding stock of Violet Company for $720,000. For the year ended December 31, 20Y7, Violet Company earned income of $190,000 and paid dividends of $40,000. On January 31, 20Y8, Mikedes Company sold all of its investment in Violet Company stock for $770,000. Required: Journalize the entries for Mikedes Company for the purchase of the stock, the share of Violet income, the dividends received from Violet Company, and the sale of the Violet Company stock. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.Lake acquired a controlling interest in Boxwood several years ago. During the current fiscal period, the two companies individually reported the following income (exclusive of any investment income): Lake $ 363,000 120,000 Boxwood Lake paid a $60,000 cash dividend during the current year, and Boxwood distributed $5,000. Boxwood sells inventory to Lake each period. Intra-entity gross profits of $22.400 were present in Lake's beginning inventory for the current year, and its ending inventory carried $41,500 in intra-entity gross profits. View each of the following questions as an independent situation. The effective tax rate for both companies is 21 percent. a. If Lake owns a 60 percent interest in Boxwood, what total income tax expense must be reported on a consolidated income statement for this period? (Round the intermediate calculations and final answers to the nearest dollar amount.) b. If Lake owns a 60 percent interest in Boxwood, what total amount of income taxes must be paid by…Acker Company bought 100% of Howell Company on 1/1/X1 for $1,440,000 and began applying the equity method. The book value of Howell's equity on that date was $1,440,000. In year X1, Howell reported net income of $100,000 and paid $40,000 in dividends. During year X1, Howell sold 1,000 units of inventory to Acker for $20,000 that had cost $10,000. On 12/31/X1, 400 of the units remained in Acker's inventory. How much investment income should Acker report in year X1
- Lake acquired a controlling interest in Boxwood several years ago. During the current fiscal period, the two companies individually reported the following income (exclusive of any investment income): Lake Boxwood $ 329,000 110,000 Lake paid a $75,000 cash dividend during the current year, and Boxwood distributed $15,000. Boxwood sells inventory to Lake each period. Intra-entity gross profits of $20,400 were present in Lake's beginning inventory for the current year, and its ending inventory carried $35,900 in intra-entity gross profits. View each of the following questions as an independent situation. The effective tax rate for both companies is 21 percent. a. If Lake owns a 60 percent interest in Boxwood, what total income tax expense must be reported on a consolidated income statement for this period? (Round the intermediate calculations and final answers to the nearest dollar amount.) b. If Lake owns a 60 percent interest in Boxwood, what total amount of income taxes must be paid by…Lake acquired a controlling interest in Boxwood several years ago. During the current fiscal period, the two companies individually reported the following income (exclusive of any investment income): Lake Boxwood $ 308,000 100,000 Lake paid a $70,000 cash dividend during the current year, and Boxwood distributed $18,000. Boxwood sells inventory to Lake each period. Intra-entity gross profits of $25,200 were present in Lake's beginning inventory for the current year, and its ending inventory carried $38,700 in intra-entity gross profits. View each of the following questions as an independent situation. The effective tax rate for both companies is 21 percent. a. If Lake owns a 60 percent interest in Boxwood, what total income tax expense must be reported on a consolidated income statement for this period? (Round the intermediate calculations and final answers to the nearest dollar amount.) b. If Lake owns a 60 percent interest in Boxwood, what total amount of income taxes must be paid by…Tamarisk Corporation purchased 380 shares of Sherman Inc. common stock for $13,300 (Tamarisk does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $37.00 per share.Prepare Tamarisk's journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (