Question

On January 2, Peyroux Company acquired 36% of the outstanding stock of Gruden Company for $553,000....

On January 2, Peyroux Company acquired 36% of the outstanding stock of Gruden Company for $553,000. For the year ended December 31, Gruden Company earned income of $100,800 and paid dividends of $22,500.

Prepare the entries for Peyroux Company for the purchase of the stock, the share of Gruden income, and the dividends received from Gruden Company. Refer to the Chart of Accounts for exact wording of account titles.

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Answer #1
Date Account Titles and Explanation Debit Credit
Jan-02 Investment in company Gruden $553,000
$553,000
(to record purchase of shares of company Gruden)
Dec-31 Investment in Company Gruden (100,800*36%) $36,288
Investment revenue $36,288
(share of income in company Gruden)
Dec-31 Cash (22,500 *36%) $8,100
Investment in company Gruden $8,100
(Dividends received from company Gruden)

(chart was not uploaded along with the question)

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