Help pleaseeee! preparing Journal entry Market Research Syndicate acquired 100 s
ID: 2489127 • Letter: H
Question
Help pleaseeee! preparing Journal entry
Market Research Syndicate acquired 100 shares of Catskill Tools for $450,000 on January 1, 2X13. During 2X13, Catskill Tools declared and paid a total of $8,000 in dividends and reported net income of $50,000. Market Research Syndicate plans on holding the investment for a long time. Assuming Market Research Syndicate owns 40% of Catskill Tools, prepare journal entries for Market Research Syndicate for the following events: acquisition recognition of net income dividends Assuming Market Research Syndicate owns 10% of Catskill Tools, prepare journal entries for Market Research Syndicate for the following events:Explanation / Answer
1st jan 2013
(1)Acquisition
Investment in Catskill Tools Dr $4,50,000
To Cash $4,50,000
(Being 100 Shares Purchase of Catskill Tools)
Recognition of Net Income
Investment in Catskill Tools Dr $20,000 ($50,000*40%)
To Investment Income $20,000
(Being Investment Income $50,000*40%)
Dividend
Investment in Catskill Tools Dr $3,200($8000*40%)
To Dividend Income $3200
(Being Dividend income from Catskill Tools)
(2)
Acquisition
Investment in Catskill Tools Dr $4,50,000
To Cash $4,50,000
(Being 100 Shares Purchase of Catskill Tools)
Recognition of Net Income
Investment in Catskill Tool Dr $5,000 ($50,000*10%)
To Investment Income $5,000
(Being Investment Income $50,000*10%)
Dividend
Investment in Catskill Tool Dr $800($8000*10%)
To Dividend Income $800
(Being Dividend income from Catskill Tool )
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