Exercise 12-7 (Part Level Submission) On January 1, Zabel Corporation purchased

Question

Exercise 12-7 (Part Level Submission)

On January 1, Zabel Corporation purchased a 25% equity in Helbert Corporation for $160,000. At December 31, Helbert declared and paid a $44,000 cash dividend and reported net income of $220,000.

(a)

Date

Account Titles and Explanation

Debit

Credit

(To record dividends received)

(To record equity in Helbert Corporation's net income)

Exercise 12-7 (Part Level Submission)

On January 1, Zabel Corporation purchased a 25% equity in Helbert Corporation for $160,000. At December 31, Helbert declared and paid a $44,000 cash dividend and reported net income of $220,000.

Explanation / Answer

(a)

Date Account titles and explanation Debit Credit Jan. 1 Stock Investments $160,000 Cash $160,000 Dec. 31 Cash ($44,000 X 25%) $11,000 Stock Investments $11,000 Dec. 31 Stock Investments $55,000 Revenue from Stock Investments($220,000 X 25%) $55,000

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