Answered

Discover the answers to your questions at Westonci.ca, where experts share their knowledge and insights with you. Connect with a community of experts ready to help you find solutions to your questions quickly and accurately. Get immediate and reliable solutions to your questions from a community of experienced professionals on our platform.

On January 1, 2020, Cheyenne Company purchased 40% of Santos Corporation 465,000 outstanding shares of common stock at a total cost of $13 per share. On October 25, Santos declared and paid a cash dividend of $0.40 per share. On December 31, Santos reported a net income of $934,000 for the year and the market price of its common stock was $14 per share. Prepare all necessary journal entries for Mica company for 2020.

Sagot :

Solution :

The following journal entry will be prepared to record the transactions

Date          General Journal                                 Debt($)                  Credit($)

Jan 1    Investment in Cheyenne Co.               2,418,000

             (465,000 x 40% x $13)

           Cash                                                                                         2,418,000

Oct. 25  Cash (465,000 x 40% x $0.4)             74,400    

             Investment in Cheyenne Co.                                                 74,400

Dec 31   Investment in Cheyenne Co.               373,600

               ($934,000 x 40%)  

              Equity income in Cheyenne Co.                                           373,600

Thank you for visiting. Our goal is to provide the most accurate answers for all your informational needs. Come back soon. We hope this was helpful. Please come back whenever you need more information or answers to your queries. Thank you for choosing Westonci.ca as your information source. We look forward to your next visit.