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3 years ago

On January 2, 20Y4, Whitworth Company acquired 40% of the

Business

1 answer:

Gelneren [198K]3 years ago

6 0

Answer:

Journal entries needed for:

a. Purchase of stock

b. Share of Aloof income

c. Dividend

d. Sale of Aloof company stock

a. Purchase of stock

Date Account Title Debit Credit

Jan 2, 20Y4 Investment in Aloof company $340,000

stock

Cash $340,000

b. Share of Aloof income

Date Account Title Debit Credit

Dec 31, 2024 Investment in Aloof company $72,000

stock

Income of Aloof Company $72,000

Working:

= 40% * 180,000 income

= $72,000

c. Dividend

Date Account Title Debit Credit

Dec 31, 2024 Cash $4,000

Investment in Aloof company $4,000

stock

Working:

= 40% * 10,000 dividend

= $4,000

d. Sale of stock

Date Account Title Debit Credit

Dec 31, 2024 Cash $405,000

Loss on sales of Aloof $3,000

company stock

Investment in Aloof company $408,000

stock

Working:

Value of stock = Purchase price + share of Aloof income - Share of dividend

= 340,000 + 72,000 - 4,000

= $408,000

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