Question

As a long-term investment at the beginning of the 2021 fiscal year, Florists International purchased 25% of Nursery Supplies Inc.'s 16 million shares for $59 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 $36 million and distributed cash dividends of $2.25 per share. At the end of the year, the fair value of the shares is $55 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

Answer
Date	General Journal	Debit (in millions)	Credit (in millions)
	Investment in Nursery Supplies shares	$      59
	Cash		$      59
	(To record the equity investment)
	Investment in Nursery Supplies shares	$        9
	Investment revenue ($36million x 25%)		$        9
	(To record the investment revenue)
	Cash (16 millon *25%*2.25)	$        9
	Investment in Nursery Supplies shares		$        9
	(To record the receipt of cash dividend)