Question

Q4. On March 1, Year 1, Phase Inc. purchases 35% of the outstanding shares of Flory Corporation stock for $575,000. On December 31, Year 1, Flory reports net income of $435,000. On January 15, Year 2, Glory pays total dividends to stockholders of $77,000. Journalize the three transactions.

Answer 1

Answer:

Date	Accounts Titles & Explanations	Debit ($)	Credit ($)
Mar-01, Year 1	Investment in Glory Corporation A/c	575,000
	To Cash A/c		575,000
Dec-01, Year 1	Investment in Glory Corporation A/c [$435000x 35%]	152,250
	To Investment Income A/c		152,250
Jan-15, Year 2	Cash A/c [$77000x 35%]	26,950
	To Investment in Glory Corporation A/c		26,950