Question

During the current year, Awning Company reported investment revenue of $4,000 from long-term investments reported using the equity method. The long-term investments account had a beginning balance of $10,000 and an ending balance of $11,000. What was the amount of cash revenue received from these investments?

Answer 1

cash dividends: 3,000

Step-by-step explanation:

We can solve for cash dividends based on how the equity method works:

Beginning investing

+ proportional net income

- cash dividends received

Ending investing

beginning + inomce - dividends = ending

10,000 + 4,000 - cash dividends = 11,000

cash dividends= 14,000 - 11,000

cash dividends = 3,000

when received, the journal entry for the dividends was as follow:

cash 3,000 debit

investing 3,000 credit

to record cash received from investment