The summarized balance sheets of Thunder Bay Corp. and FortWilliam Corp. at December 31, 2020, are as follows:

If Thunder Bay acquired a 20% interest in Fort William onDecember 31, 2020, for $45,000, and during 2021 Fort Williamreported net income of $25,000 and paid a total cash dividend of$10,000, applying the equity method would give a debit balance inthe Investment in Fort William Corp. account at the end of 2021of

a) $48,000

b) $37,000

c) $45,000

d) $50,000

Transcribed Image Text:

THUNDER BAY CORP. Balance Sheet December 31, 2020 Assets Liabilities Common shares Retained earnings Total equities FORT WILLIAM CORP. Balance Sheet December 31, 2020 Assets Liabilities Common shares Retained earnings Total equities $400,000 $50,000 200,000 150,000 $400,000 $300,000 $75,000 185,000 40,000 $300,000 THUNDER BAY CORP. Balance Sheet December 31, 2020 Assets Liabilities Common shares Retained earnings Total equities FORT WILLIAM CORP. Balance Sheet December 31, 2020 Assets Liabilities Common shares Retained earnings Total equities $400,000 $50,000 200,000 150,000 $400,000 $300,000 $75,000 185,000 40,000 $300,000

Answer rating: 100% (QA)

correct option is a48000 Calculations Using Equity Me... View the full answer