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bixtya [17]
3 years ago
6

On July 1, 20X4, Pillow Corp. obtained significant influence over Sleep Co. through the purchase of 3,000 shares of Sleep's 10,0

00 outstanding shares of common stock for $20 per share. On December 15, 20X4, Sleep paid $40,000 in dividends to its common stockholders. Sleep's net income for the year ended December 31, 20X4, was $120,000, earned evenly throughout the year. In its 20X4 income statement, what amount of income from this investment should Pillow report
Business
1 answer:
puteri [66]3 years ago
3 0

Answer: $18,000

Explanation:

Income from investment is the percentage of the acquired company's income that the company that acquired it will report as their own based on their percentage of ownership.

By purchasing 3,000 shares out of 10,000, Pillow Corp owns;

= 3,000 / 10,000

= 30% of Sleep Co.

These shares were bough on July 1 so the relevant period will be half a year.

At the end of the year, Pillow Corp will report 30% of half of Sleep Co. income as income from investment for the year.

= 30% * 120,000 * 0.5

= $18,000

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Greer Company developed the following data for the current year:
bixtya [17]

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option (C) is correct.

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Journalize the following merchandise transactions, using the net method under a perpetual inventory system.
Olenka [21]

Answer:

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