Question

Number or shares of stock purchased 52,000, Price per share $18.00, Price of stock purchased with cash $936,000, Date of Purchase 1/1/X7, Total Book Value of Max Corporation $1,000,000, Attributable to Land % Purchased 37%, Total Net income earned by Max Corp. for the period ending 12/31/X7 $127,450, Total Dividend declared by Max Corp 6/1/X8 $50,000, Total Net loss earned by Max Corp for the period ending 12/31/X8 $(200,000), Investment sold for cash on 1/1/X9 for $1,500,000

a. Record the original investment. What is the impact of this journal entry on the asset section of the balance sheet?.

b. For the year ending 12/31/X7 what is the impact on the investment account?

c. For the year ending 12/31/X8 what is the impact on the investment account for the payment of a dividend by the investee corporation?

d. For the year ending 12/31/X8 what is the total impact on net income from all journal entries?

e. What is the balance in the investment account at 12/31/X8?

Answer 1