1. EFGH Company has the following balances in its Owners Equity Accounts:

Common Shares $5 par value $2,000,000

Paid in Capital In Excess of Par value 500,000

Preferred Shares $6 par value 1,200,000

Paid In Capital in Excess of Par 800,000

Retained Earnings 700,000

Additional Information:

IJKL Company purchased 60% of EFGH S Common shares for $7 per share.

At the end of the year EFGH made a profit of $600,000 and declared and paid dividends of $1 per share.

7.

Required:

1. Journal entries to record the purchase

2. Journal entries to record the Companys share of the profit.

3. Prepare the journal entries to record the receipt of dividends paid to IJKL company.