Watson Corporation owns equity-method investments in several companies. Suppose

Question

Watson Corporation owns equity-method investments in several companies. Suppose Watson paid $1,300,000 to acquire a 40% investment in Smith Software Company. Smith Software reported net income of $690,000 for the first year and declared and paid cash dividends of $420,000. Requirements . Record the following in Watson's journal: (a) purchase of the investment, (b) Watson's proportion of Smith Software's net income, and (c) receipt of the cash dividends 2. What is the ending balance in Watson's investment account? Requirement 1. Record the following in Watson's journal: (a) purchase of the investment, (b) Watson's proportion of Smith Software's net income, and (c) receipt of the cash dividends. (Record debits first, then credits. Exclude explanations from any journal entries.) alio rom air oumars no of Snth (a) Begin by recording the entry for the purchase of the investment in Smith Software Company. Journal Entry Date Accounts Debit Credit (b) Now record the entry for Watson's portion of Smith Software's net income. Journal Entry Date Accounts Debit Credit

Explanation / Answer

Journal entry :

Ending balance of investment account :

Date accounts & explanation debit credit Investment in smith software company 1300000 Cash 1300000 (To record investment) Investment in smith software company (690000*40%) 276000 Income from smith software company 276000 (TO record net income) Cash (420000*40%) 168000   Investment in smith software company 168000 (To record dividend)

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.