(Equity Method) Parent Co. invested $1,000,000 in Sub Co. for 25% of its outstanding stock.

Sub Co. pays out 40% of net income in dividends each year.

Instructions Use the information in the following T-account for the investment in Sub to answer the following questions.

(a) How much was Parent Co.’s share of Sub Co.’s net income for the year?

(b) How much was Parent Co.’s share of Sub Co.’s dividends for the year?

(c) What was Sub Co.’s total net income for the year?

(d) What was Sub Co.’s total dividends for the year?

Investment in Sub Co. 1,000,000 110,000 44,000