Need explanation, how to get 140000, and why ... Mars Services. Inc pays S790.00

Question

Need explanation, how to get 140000, and why ...

Mars Services. Inc pays S790.000 to acquire 32% (200,000 shares) of voting stock of Grey Investments, Inc. on January 5, 2017 Grey Investments Inc. declares and pays a cash dividend of $1.40 per share on June 14, 2017. Which of the following is the correct journal entry for the transaction on June 14, 2017? 140,000 O A. Cash 140,000 Long-term Investments-Mars Services, Inc. 140,000 B. Cash Long-term Investments Grey Investments, Inc 140,000 O C. Cash 140,000 40,000140.000 D. Long-term Investments-Grey Investments, Inc Cash

Explanation / Answer

Computation of dividend value:-

Total no of shares getting dividend = 2,00,000 shares

Cash dividend per share . = 1.4 per share

Declare dividend date. = June 14 , 2017

Shares acquisition date. = January 5, 2017

From the above date, we should understand that dividend can recieve only for the period from January to June .

i.e., total dividend revived= 2,00,000*1.4*1/2 = 1,40,000

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