Nadal Corporation purchased 10,000 shares of Cutler Inc.'s common stock, on January 1, 2019, for $100,000. During

Question:

Nadal purchased 10,000 shares of Cutler Inc.'s common stock, on January 1, 2019, for $100,000. During 2019, Cutler declared and paid cash dividends to Nadal in the amount of $8,000. Nadal's share of Cutler's net income for 2019 was $12,400. At December 31, 2019, the fair value of 10,000 shares of Cutler's was $120,000. This is Nadal's only investment.
Required:
1. Assume that Cutler has 75,000 shares of outstanding. What journal entries will Nadal make during 2019 relative to this investment?
2. Assume that Cutler has 40,000 shares of outstanding. What journal entries will Nadal make during 2019 relative to this investment?
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
A 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...