Question

As a long-term investment at the beginning of the 2021 fiscal year, Florists International purchased 30% of Nursery Supplies Inc.'s 15 million shares for $64 million. The fair value and book value of the shares were the same at that time. During the year, Nursery Supplies earned net income of $50 million and distributed cash dividends of $2.00 per share. At the end of the year, the fair value of the shares is $60 million.

Required:
Prepare the appropriate journal entries from the purchase through the end of the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions, (i.e., 10,000,000 should be entered as 10).)

Answer 1

Ans:

Date	Accounts Title and Explanation	Debit	Credit
1	Investment in Nursery Supplies shares	64,000,000
	Cash		64,000,000
	(To record the investment in Nursery Supplies shares)
2	Investment in Nursery Supplies shares	15,000,000
	Investment Revenue(50 Millions*30%)		15,000,000
	(To record the investment revenue in Nursery Supplies shares)
3	Cash	9,000,000
	Investment in Nursery Supplies shares		9,000,000
	( To record the cash Dividends received from Nursery Supplies shares)
	(15 Millions*30%*2)
4	No Entry Required

Hope this helped ! Let me know in case of any queries.