Question

Cullumber Company owns 12000 of the 50000 outstanding shares of Taylor, Inc. common stock. During 2018, Taylor earns $980000 and pays cash dividends of $795000. Cullumber should report investment revenue for 2018 of:________

Answer 1

$235,200

Step-by-step explanation:

Given that

Owning shares = 12,000 shares

Total shares = 50,000 shares

Earnings = $980,000

Cash dividend = $795,000

The amount of investment revenue reported is shown below:

= Earning × owning shares ÷ total shares

= $980,000 × 12,000 shares ÷ 50,000 shares

= $235,200

We simply apply the above formula to find out the investment revenue