Phillips Company bought 40 percent ownership in Jones Bag Company on January 1, 20X1, at underlying book value. In 20X1, 20X2, and 20X3, Jones Bag reported the following:

The balance in Phillips Company€™s investment account on December 31, 20X3, was $54,000.

Required
In each of the following independent cases, determine the amount that Phillips paid for its investment in Jones Bag stock assuming that Phillips accounted for its investment using the
(a) Cost method and
(b) Equitymethod.

Transcribed Image Text:

Year 20X1 20X2 20X3 Net Income Dividends 8,000 12,000 20,000 $15,000 10,000 10,000