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Travka [436]
3 years ago
9

Windsor Locomotive Corporation purchased for $550,000 a 40% interest in Lopez Railways, Inc. This investment enables Windsor Loc

omotive to exert significant influence over Lopez Railways. During the year, Lopez Railways earned net income of $149,000 and paid dividends of $27,000. Prepare Windsor Locomotive’s journal entries related to this investment.
Business
1 answer:
Vanyuwa [196]3 years ago
4 0

Answer:

Journal Entries

Dr. Investment in Lopez Railways Inc.  $600,000  

Cr. Cash                                     $600,000

Dr. Investment in Lopez Railways Inc                   $59,600

Cr. Income of Investment in Lopez Railways Inc $59,600

Dr. Cash                                                 $10,800

Cr. Investment in Lopez Railways Inc  $10,800

Explanation:

As Windsor Locomotive Corporation has purchased 40% interest in Lopez Railway Inc.Lopez Inc. is classified as the associate company of Windsor Corp.

Share in net Income = $149,000 x 40% = $59,600

Share In Dividend = $27,000 x 40% = $10,800

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