On July 1, 2020, Williams Inc., a private enterprise, acquired 1,250 shares of Smith Ltd. for $75,000.
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Question:
On July 1, 2020, Williams Inc., a private enterprise, acquired 1,250 shares of Smith Ltd. for $75,000. This investment represents a 19% interest in Smith Ltd. and Williams Inc. uses the cost method to record the investment. On December 31,2020, Smith Ltd. paid a $35,000 dividend to its shareholders. At June 30, 2021, Smith Ltd.'s shares were valued at $30 per share and Smith Ltd. reported a net loss of $50,000 for the year. On September 15, 2021, Williams Inc. sold the shares for $100,000. Both Williams Inc. and Smith Ltd. have June 30, 2021 year-ends.
Required:
Prepare dated journal entries for the investment on the acquiring company's books from acquisition to disposal. Ignore income taxes. Journal entry descriptions are optional.
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