?11 a search neE Equity Method for Stock Inv On January 4, 20Y6, Spandella Compa

Question

?11 a search neE Equity Method for Stock Inv On January 4, 20Y6, Spandella Company purchased 120,000 shares of Flington Company directly from one of the founders for a price of $36 per share Filington has 300,000 shares outstanding, induding the Spandella shares. On July 2, 20Y6, Filington paid $324,000 in total dividends to Rs shareholders. On December 31, 20Y6, Filington reported a net income of $1,102,000 for the year Spandella uses the equity method in accounting for its investment in Filington ? tok 43800 2016 Jan. 4 ton Co. Stock v 20Y6 Dec. 31 Check My Work Previous Next

Explanation / Answer

Journal entry :

b) Balance of the investment = 4320000+440800-129600 = $4631200

Date account and explanation debit credit Jan 4 Investment in Filington Co. Stock 4320000 Cash 4320000 July 2 Cash (324000*40%) 129600   Investment in Filington Co. Stock 129600 Dec 31 Investment in Filington Co. Stock (1102000*40%) 440800 Income of filington co. 440800

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