At the 20X5 annual meeting for Jasmine€™s shareholders, Curry nominated seven directors for Jasmine€™s 12-person board of directors. After some negotiation, five of Curry€™s nominees were accepted onto the board. During fiscal year 20X6, the following occurred:

1. Curry shifted a substantial amount of business to Jasmine. Jasmine became the major supplier of one of Curry€™s raw materials and had sales totalling $7,000,000 to Curry. Of that total, $1,200,000 was in Curry€™s raw materials inventory at year-end. The other $5,800,000 had been utilized in finished goods, of which 40% was still in inventory on March 31, 20X6.

2. Curry began selling some products to Cinnamon Corp., a wholly owned subsidiary of Jasmine. Fiscal 20X6 sales totalled $2,500,000, all within the last two months of the year. At year-end, 60% of the sales were still in Cinnamon€™s inventory.

3. Operating results for fiscal 20X6 were reported as follows:

Required

Using the information above and in P 6€“9 , prepare a schedule(s) in which you:

1. Compute the amount of investment income that Curry should recognize in fiscal 20X6 from its investment in Jasmine.

2. Compute the balance of Curry€™s investment account for its investment in Jasmine at March 31, 20X6.

Transcribed Image Text:

Jasmine Curry Sales $80,000,000 $20,000,000 Cost of sales (12,000,000) 8,000,000 (4,000,000) (56,000,000) 24,000,000 (6,000,000) (7,200,000) Operating expenses Income tax expense Net income and comprehensive income (1,600,000) $ 2,400,000 $10,800,000