Question

On January 1, Cullumber Corporation purchased a 25% equity investment in Shane Corporation for $160,100. At December 31, Shane declared and paid a $80,200 cash dividend and reported net income of $358,400.

Required:
Journalize the transactions.

Answer 1

Date Account Title Debit Credit

January, 1 Stock Investment $160,100

Cash $160,100

Date Account Title Debit Credit

December, 1 Stock Investment $89,600

Revenue from Stock Investment $89,600

Working:

= Shane net income * Cullumber ownership

= 358,400 * 25%

= $89,600

Date Account Title Debit Credit

December, 1 Cash $20,050

Stock Investment dividend receivable $20,050

Working:

= Dividend * Cullumber ownership

= 80,200 * 25%

= $20,050