AUDITING PRACTICE QUESTIONS

SHORT ANSWERS

Please answer Part A-D

1. Superior Company has 40% of the Common Stock of ABC Company. It paid $400,00 cash to ABC .ABC Company paid $20,000 dividends in 2022 to all its shareholders. Required: a. Record the purchase of the shares by Superior Company in its books. b. Record the receipt of the dividends by Superior Company C. How does Superior Company report this investment in its Balance Sheet in 2022. D. How does ABC Company report this transaction in its books