On August 4, 2015, Cappio Corporation purchased 1,000 shares of Maxweller Company for $45,000. The following information
Question:
On August 4, 2015, Cappio Corporation purchased 1,000 shares of Maxweller Company for $45,000. The following information applies to the shares price of Maxweller Company:
Price
12/31/2016.........................$52
12/31/2017.........................$47
12/31/2017...........................38
Maxweller Company declares and pays cash dividends of $2 per share on June 1 of each year.
Required:
1. Prepare journal entries to record the facts in the case, assuming that Maxweller shares are traded on an open market.
2. Prepare journal entries to record the facts in the case, assuming that Cappio uses the equity method to account for the investment. Cappio owns 30 percent of Maxweller, and Maxweller reported $50,000 of net income each year.
CorporationA Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
Fundamentals of Financial Accounting
ISBN: 978-1259269868
5th Canadian edition
Authors: Fred Phillips, Robert Libby, Patricia Libby, Brandy Mackintosh