Assume the same facts as in QS except that the stock acquired represents 40% of BBE Corp.’s outstanding stock. Also assume that BBE Corp. paid a $150,000 dividend on November 1, 2011, and reported a net income of $1,050,000 for 2011. Prepare the entries to record
In QS, On May 20, 2011, Chiu Co. paid $1,500,000 to acquire 25,000 common shares (10%) of BBE Corp. as a long-term investment. On August 5, 2012, Chiu sold one-half of these shares for $937,500.
(a) The receipt of the dividend
(b) The December 31, 2011, year-end adjustment required for the investment account.