Question

On January 1, 2021, Bangle Company purchased 30% of the voting common stock of Sleat Corp. for $1,100,000. Any excess of cost over book value was assigned to goodwill. During the year, Sleat paid dividends of $28,000 and reported a net loss of $112,000. What is the balance in the investment account on December 31, 2021

Answer 1

Answer:

$1,058,000

Explanation:

Calculation to determine the balance in the investment account on December 31, 2021

Using this formula

December 31, 2021 Balance in the investment account=Voting common stock-Net loss-Dividends

Let plug in the formula

December 31, 2021 Balance in the investment account=$1,100,000 -(30%*$112,000)-(30%*$28,000)

December 31, 2021 Balance in the investment account=$1,100,000 - $33,600 - $8,400

December 31, 2021 Balance in the investment account=$1,058,000

Therefore the balance in the investment account on December 31, 2021 is $1,058,000