Chapter 16, Problem 16.11BE

To determine

To prepare: Journal entries required on the date of acquisition and at the end of the first year after acquisition assuming that company J uses the equity method to account for its investment in company T.

Given information:

Company J acquired 25% of the shares of company T.

The total worth of the shares is $1,340,000.

Net income of company T is $875,500.

Total numbers of outstanding shares are 80,000.

Divided to per share will be $3.75.