Question

Cullumber Corporation purchased 37000 shares of common stock of the Sherman Corporation for $52 per share on January 2, 2020. Sherman Corporation had 100000 shares of common stock outstanding during 2021, paid cash dividends of $162000 during 2021, and reported net income of $620000 for 2021. Cullumber Corporation should report revenue from investment for 2021 in the amount of:_________.

A. $169460.
B. $252340.
C. $59940.
D. $229400.

Answer 1

Revenue from investment = 229,400

Step-by-step explanation:

Given:

Purchased shares = 37,000

Value per share = $52

Sherman Corporation total shares = 100,000

Cash dividends = $162000

Net income = $620000

Find:

Revenue from investment = ?

Computation:

Revenue from investment = Net income (Purchased shares / Sherman Corporation total shares)

Revenue from investment = $620000 (37,000 / 100,000)

Revenue from investment = 229,400