On January 1, 2019, Coca-Cola and another company jointly acquired Argo Natural Juices. Each acquiring company paid $10 million to acquire 50% of Argo. At the date of acquisition, Argo’s book value was $6 million, consisting of $2 million in capital stock, $3.7 million in retained earnings, and 0.3 million in accumulated other comprehensive income. The basis difference was attributed entirely to goodwill. It is now December 31, 2024. Argo reported net income of $240,000, other comprehensive income of $10,000, and declared and paid cash dividends of $40,000 in 2024. Coca-Cola treats Argo as an equity method investment. Argo’s balance sheet on December 31, 2024, is as follows:

	Argo
Current assets	$ 500,000
Plant & equipment, net	30,500,000
Total assets	$ 31,000,000
Liabilities	$ 23,000,000
Capital stock	2,000,000
Retained earnings	6,100,000
Accumulated other comprehensive loss	(100,000)
Total liabilities & equity	$ 31,000,000

a. Prepare Coca-Cola’s 2024 entries related to its investment in Argo, using either a spreadsheet format or a T-account format.

b. Calculate the ending balance in Investment in Argo, appearing on Coca-Cola’s December 31, 2024 balance sheet.

Answer rating: 100% (QA)

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