Ahmad Corporation paid $350,000 for a 30 percent interest in Fakhry Corporation on July 1, 2016, when Fakhry Corporation’s common stock was at $350,000 and retained earnings at $150,000. In 2016, Fakhry declared and paid dividends of $20,000 each on March 1 and September 1. Fakhry’s income for 2016 is summarized below: Income before extraordinary item $80,000 Extraordinary gains, December 2016 20,000 Net income $100,000 Fakhry’s assets and liabilities were stated at fair values on July 1, 2016, except for land that was undervalued by $25,000 and equipment with a five-year remaining useful life that was undervalued by $50,000. 

Required: 

Prepare all the journal entries (other than closing entries) on the books of Ahmad Corporation during 2016 to account for the investment in Fakhry.

Answer rating: 100% (QA)

Date Accounts title Debit Credit July 1 2016 Investm... View the full answer