Question

On January 1, 2017, Cheyenne Corporation purchased 30% of the common shares of Ayayai Company for $171,000. During the year, Ayayai earned net income of $79,000 and paid dividends of $19,750. Prepare the entries for Cheyenne to record the purchase and any additional entries related to this investment in Ayayai Company in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

Cheyenne Corporation

Entries to record the purchase and additional investments:

Date	Account Titles and Explanation	Ref. No.	Debit	Credit
1-Jan-17	Equity Investment		$171,000
	Cash			$171,000
	(To record the purchase of 30% stake in Ayayai Corp)
31-Dec-17	Cash		$5,925
	Equity Investment			$5,925
	(To record receipt of dividends, 19,750 x 30% = $5,925)
31-Dec-17	Equity Investment		$23,700
	Revenue from Investments			$23,700
	(To record revenue from investments, (79,000 x 30% = $23,700)