Equity Method

On January 2, Yorkshire Company acquired 40% of the outstanding stock of Fain Company for $270,000. For the year ended December 31, Fain Company earned income of $70,000 and paid dividends of $22,000.

Prepare the entries for Yorkshire Company for the purchase of the stock, the share of Fain income, and the dividends received from Fain Company.

Jan. 2 - Purchase Dec. 31 - Income Dec. 31 - Dividends Cash Cash Dividends Income of Fain Company Interest Receivable Interest Revenue Investment in Fain Company Stock