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On January 1, 2018, Bowie Company purchased 20,000 shares of the stock of Spears Co, and did obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $200,000, and represents a 30% ownership stake.

On January 1, 2018, Bowie Company purchased 20,000 shares of the stock of Spears Co, and did obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $200,000, and represents a 30% ownership stake. Spears made $50,000 of net income in 2018, and paid dividends of $20,000. The price of Spears' stock increased from $10 per share at the beginning of the year, to $12 per share at the end of the year.

a. Show the January 1 and December 31 general journal entries for Bowie Company.

b.How much should the Bowie Company report on the balance sheet for the investment in Spears at the end of 2018?

  • Expert Answer

a. January 1 general journal entry for Bowie Company: Debit: Investment in Spears Co. - $200,000 Cre View the full answer


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Intermediate Accounting Volume 2

Intermediate Accounting Volume 2

ISBN: 9781260881240

8th Edition

Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel

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Posted Date: May 28, 2023 20:02:12
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