On January 1, 2020, Dua Company purchased 30,000 shares of the stock of Lipa, Inc. and did obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $240,000, and represents a 35% ownership stake. Lipa made $150,000 of net income in 2020, and paid dividends of $25,000. The price of Lipa's stock increased from $8 per share at the beginning of the year, to $10 per share at the end of the year.

Requirements:

1. Prepare the January 1 and December 31 general journal entries for Dua Company.
2. How much should the Dua Company report on the balance sheet for the investment in Lipa at the end of 2020?

Answer rating: 100% (QA)

January 1 2020 Debit Investment in Lipa Inc 240000 Credit Cash 240000 Explanation Records the purcha... View the full answer