Answer:
1. Investment at beginning $5,000,000
Add: Net Income (1200000*35%) $420,000
Less: Dividend (100000*35%) <u>$35,000 </u>
Investment at year end <u>$5,385,000</u>
2. Amount of Income from Investment = $1,200,000*35% = $420,000
3. <u>Journal entries to record transactions</u>
Particulars Debit Credit
Investment in Marvel Co. $420,000
Equity Income $420,000
(Recording receipt of net income)
Cash $35,000
Investment in Marvel Co $35,000
(
Recording receipt of dividend)