Question

g On January 2, Yorkshire Company acquired 34% of the outstanding stock of Fain Company for $400,000. For the year ended December 31, Fain Company earned income of $104,000 and paid dividends of $32,000. Prepare the entries for Yorkshire Company for the purchase of the stock, the share of Fain income, and the dividends received from Fain Company.

Answer 1

Answer:

See the explanation below:

Explanation:

Share of profit of Fain Company = $104,000 * 34% = $35,350

Dividend received = $32,000 * 34% = $10,880

Date             Details                                                 Dr ($)              Cr ($)  

Jan. 2           Investment in Fain Company           400,000

                    Cash                                                                         400,000

                    To record payment for investment in Fain Company          

Dec. 31         Investment in Fain Company             35,350

                    Share of profit of Fain Co.                                        35,000

                    To record share of profit in Fain Company                          

Dec. 31         Cash                                                     10,880

                    Investment in Fain Company                                    10,880

                    To record received from investment in Fain Company