On January 2, 2021, Sanborn Tobacco Inc. bought 10% of Jackson
Industry’s capital stock for $91 million. Jackson Industry’s net
income for the year ended December 31, 2021, was $121 million. The
fair value of the shares held by Sanborn was $100 million at
December 31, 2021. During 2021, Jackson declared a dividend of $61
1. Prepare all appropriate journal entries related to the investment during 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)
Record the purchase of Jackson Industry capital stock for $91 million.
Record Sanborn Tobacco's portion of Jackson Industry's net income of $121 million.
Record the dividend revenue.
Record the fair value adjustment.
Journal entries related to the investment during 2021:
amount in millions
|Particulars||Debit ($)||Credit ($)|
|Investment in jackson||91|
|(Recording the purchase of Jackson Industry capital stock )|
|No journal entry required|
|(Recording Sanborn Tobacco's portion of Jackson Industry's net income of $121 million)|
|To Investment Revenue||6.1|
|(Recording the dividend revenue) 61 * 10%share|
|Fairvalue Adjustment a/c||9|
|To Unrealisied gain or loss - OCI||9|
|(Recording the fair value adjustment $100-$91)|
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