Recording Entries Under the Equity Method On January 1, Evergreen Inc. purchased 3,750 of the 15,000...

 

Transcribed Image Text:

Recording Entries Under the Equity Method On January 1, Evergreen Inc. purchased 3,750 of the 15,000 outstanding shares of common stock of Nature Net Inc. obtaining significant influence of the company. The shares were purchased for $13,000 cash and Evergreen Inc. intends for it to be a long-term investment. During the year, Nature Net Inc. reported net income of $67,600 and declared and paid dividends of $31,200. a. Prepare Evergreen Inc.'s entry on January 1, for the purchase of the equity investment. b. Prepare Evergreen Inc's entries on December 31, to record its investment income and the receipt of dividends. Date Account Name Dr. Jan. 1 a. b. Dec. 31 Dec. 31 To record investment income To record receipt of declared dividends 0000 O " OOOO 0 0 0 0 0 OO 0 Cr. c. What is the ending balance of the Investment account on December 31? Investment account balance, Dec. 31 s 0 OOOO 0 OO 0 0 Recording Entries Under the Equity Method On January 1, Evergreen Inc. purchased 3,750 of the 15,000 outstanding shares of common stock of Nature Net Inc. obtaining significant influence of the company. The shares were purchased for $13,000 cash and Evergreen Inc. intends for it to be a long-term investment. During the year, Nature Net Inc. reported net income of $67,600 and declared and paid dividends of $31,200. a. Prepare Evergreen Inc.'s entry on January 1, for the purchase of the equity investment. b. Prepare Evergreen Inc's entries on December 31, to record its investment income and the receipt of dividends. Date Account Name Dr. Jan. 1 a. b. Dec. 31 Dec. 31 To record investment income To record receipt of declared dividends 0000 O " OOOO 0 0 0 0 0 OO 0 Cr. c. What is the ending balance of the Investment account on December 31? Investment account balance, Dec. 31 s 0 OOOO 0 OO 0 0

Answer rating: 100% (QA)

WN1 Calculation of Proportionate Influence of Evergreen Inc in Nature Net Inc Share of Ownership 375... View the full answer