On January 1 Royal Company purchased a 25% equity in Connors Ltd, for 180,000. At December 31

Question:

On January 1 Royal Company purchased a 25% equity in Connors Ltd, for £180,000. At December 31 Connors declared and paid a £60,000 cash dividend and reported net income of £200,000.

Instructions

(a) Journalize the transactions.

(b) Determine the amount to be reported as an investment in Connors at December 31.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...