(#10) Equity Method

On January 1, 2016, Tiger Company purchased 6,720 shares of Eagle Corporations common stock when Eagle had 22,400 shares outstanding. On that date, the following information pertained to Eagle:

Eagle Corporation

Balance Sheet

January 1, 2016

1		Book Value	Fair Value
2	Depreciable assets (remaining life, 8 years)	$600,000.00	$620,000.00
3	Other non-depreciable assets	290,000.00	300,000.00
4	Total	$890,000.00	$920,000.00
5	Liabilities	$300,000.00	$330,000.00
6	Shareholders equity	590,000.00
7	Total	$890,000.00

During 2016, Eagle earned net income of $120,000 and paid total dividends of $48,000.

Required:

Prepare the journal entries of Tiger related to its share of Eagles net income and dividends in 2016.

CHART OF ACCOUNTS

Tiger Company

General Ledger

	ASSETS
111	Cash
114	Investment in Available-for-Sale Securities
119	Allowance for Change in Fair Value of Investment
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
181	Equipment
189	Accumulated Depreciation
191	Investment in Held-to-Maturity Debt Securities
192	Investment in Stock

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue
423	Investment Income
431	Interest Income

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
910	Income Tax Expense
912	Unrealized Holding Gain/Loss
914	Loss on Impairment

Prepare the journal entries of Tiger on December 31 related to its share of Eagles net income and receipt of dividends in 2016. Additional instructions

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1	Dec. 31
2
3	Dec. 31
4
5	Dec. 31
6