Question

Bloomfield Bakers accounts for its investment in Clor Confectionary under the equity method. Bloomfield carried the Clor investment at $150,150 and $165,550 at December 31, 2020, and December 31, 2021, respectively. During 2021 Clor recognized $75,650 of net income and paid dividends of $20,500. Assuming that Bloomfield owned the same percentage of Clor throughout 2021, its percentage ownership must have been: (Round your answer to the nearest whole percent): Multiple Choice 26%. 20%. 75%. 28%.

Answer 1

28%

Step-by-step explanation:

let X = the percentage of ownership of Clor Confectionery

the investment account balance = $150,150 - X$20,500 + X75,650 = $165,550

$150,150 + X$55,150 = $165,550

X$55,150 = $15,400

X = $15,400 / $55,150 = 0.2792 = 27.92% ≈ 28%