Question

On January 1, Wildhorse Corporation purchased a 25% equity investment in Shane Corporation for $148,900. At December 31, Shane declared and paid a $84,400 cash dividend and reported net income of $385,900.
Journalize the transactions

Answer 1

Answer:

Explanation:

The journal entries are shown below:

Stock investment A/c Dr  $148,900

      To Cash A/c  $148,900

(Being the equity investment is purchased in cash)

Cash A/c Dr $21,100         ($84,400 × 25%)

         To Stock investment A/c  $21,100  

(Being the stock dividend is received)

Stock investment A/c Dr $96,475            ($385,900 × 25%)

     To Revenue from Stock Investments A/c $96,475        

(Being the revenue is recorded)