Question

Max Inc. acquires 40% of the shares of Guarasci Inc. for $80,000 on January 1, 2013. During 2013, Guarasci earned $50,000 and paid dividends to its shareholders of $10,000. During 2014, Guarasci incurred a loss of $5,000 but continued to pay a $10,000 dividend to all shareholders.
Required
(a) Prepare the journal entries that Max Inc. would make in each of the years 2013 and 2014.
(b) Indicate the balance in the Investment in Guarasci on the balance sheet for the years ended 2013 and 2014.


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  • CreatedJune 09, 2015
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