Question

Marjam Company owns 63,600 shares of MacKenzie Company's 120,000 outstanding shares of common stock. MacKenzie Company pays $120,000 in total cash dividends to its shareholders. Marjam's entry to record this transaction should include a:a. Debit to Interest Revenue for $13,780.b. Credit to Dividend Revenue for $26,000.c. Credit to Long-Term investments for $63,600.d. Credit to Long-Term Investments for $26,000.e. Debit to Dividend Revenue for $13,780.

Answer 1

Marjam's entry to record this transaction should include a c. Credit to Long-Term investments for $63,600.

Step-by-step explanation:

Marjam investment in MacKenzie is a Financial Asset. A financial Asset is an obligation to receive cash.

Marjam will be paid a cash dividend based on the share of ownership it has in MacKenzie.

Share of Ownership = 63,600 shares/ 120,000 outstanding shares

= 53%

Marjam's entry to record cash dividends is as follows

Dividend = $120,000 × 53%

= $63,600

Debit : Bank $63,600

Credit : Long-Term investments $63,600