Question

Tamarisk Corporation acquired a 39% interest in Sheffield Company on January 1, 2021, for $490,000. At that time, Sheffield had 1,000,000 shares of its $1 par common stock issued and outstanding. During 2021, Sheffield paid cash dividends of $162,000 and thereafter declared and issued a 5% common stock dividend when the fair value was $2 per share. Sheffield's net income for 2021 was $356,000. What is the balance in Tamarisk's equity investment account at the end of 2021

Answer 1

$565,660

Step-by-step explanation:

Calculation for the balance in Tamarisk's equity investment account at the end of 2021

Cost$490,000

Share of net income $138,840

(.39 × $356,000)

Less Share of dividends ($63,180)

(.39 × $162,000)

Balance in equity investment account$565,660

Therefore the balance in Tamarisk's equity investment account at the end of 2021 will be $565,660