On January 1, 20X5, John Co. invested in Mary Ltd as an associated company by purchasing 25% of the outstanding shares of Mary at a cost of $275,000. Both firms have a fiscal year-end of December 31. On December 31, 20x4, the reported retained earnings of Mary is $22,000, and on December 31, 20x5, the reported retained earnings of Mary is $42,000. In 20x6, Mary has net income $35,000, and declared dividend $15,000. If John uses the equity method for recording its investment in Mary, what would be the balance of the "Investment in Mary" on December 31, 20X6? 

Answer rating: 100% (QA)

To solve this problem we need to use the equity method to record John Cos investment in Mary Ltd Giv... View the full answer