Basics of Equity – Equity Method Prepare the journal entries for the following t

Question

Basics of Equity – Equity Method

Prepare the journal entries for the following transactions for Batson Co.

(a) Batson Co. purchased 1,200 shares of Michael Corp. stock for $20.75 per share plus a $70 commission. Michael Corp stock has 5000 total shares outstanding including Batson’s 1200 shares. Journalize the purchase of the stock.

(b) Michael Corp net income for the year is $184,000. Record any necessary year end journal entry.  

(c) Michael Corp paid a total of $40,000 in cash dividends. Record the receipt of dividends.

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit Investment in Michael Corp stock (20.75*1200+70) 24970      Cash 24970 (To record investment) Investment in Michael Corp stock (184000*24%) 44160           Income from michael corp stock 44160 (TO record net income) Cash (40000*24%) 9600     Investment in Michael Corp stock 9600 (To record dividend)

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

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