Question

Bravo inc owns 20,000 of the 40,000 outstanding shares of bello, inc. common stock. During 2021, Bello earns 1,200,000 and pays cash dividends of 960,000. IF the beginning balance in the investment account was 750,000, the balance at December 31, 2021 should be:_______

Answer 1

the ending balance of the investment account is $870,000

Step-by-step explanation:

The computation of the ending balance of the investment account is shown below:

= Beginning balane + [(earns - dividend) × (owns shares ÷total shares)]

= $750,000 + [($1,200,000 - $960,000) × (20,000 ÷ 40,000)]

= $750,000 + $120,000

= $870,000

Hence, the ending balance of the investment account is $870,000