Chapter A, Problem 8P

Recording Investments for Significant Influence

LO A-3 Below are selected T-accounts for William Company.

Investments In Affiliates
1/1	56,432
Purchase	15,685
Share of			Share of
affiliate net			affiliate
income	?	8,564	dividends
12/31	67,450

Equity In Affiliate Earnings
	0 ?	1/1 Share of affiliate net income
	3,897	12/31

Required:

Complete the following journal entries and answer the following questions:

1. a. Purchased additional investments in affiliated companies for cash. Prepare the journal entry.
2. b. Received cash dividends on the investments. Prepare the journal entry.
3. c. At year-end, the investments in affiliates account had a fair value of $62,000; the affiliate also reported $8,120 in net income for the year. Prepare the adjusting entry.
4. d. What would be reported on the balance sheet related to the investments in affiliates on December 31?
5. e. What would be reported on the income statement for the year?