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On 1/1/xx, Company A purchases 100% of Company B for $100,000 cash. On 12/31/xx, Company B realizes profit of $20,000 and pays dividends of $5,000.
On 1/1/xx, Company A purchases 100% of Company B for $100,000 cash. On 12/31/xx, Company B realizes profit of $20,000 and pays dividends of $5,000.
Using the ACT470_Mod01-Option01.xlsx Excel spreadsheet in the Module 1 folder, you are to:
- Prepare all required entries for Company A associated with the above activities utilizing the equity method.
- Determine the balance in Company As investment account at the end of the year. Highlight the 12/31/xx balance in yellow.
ACT470-Module 1-Option 1 | |||
Account | DR | Cr | |
1/1/xx | Investment | ||
Cash | |||
12/31/xx | Investment | ||
Equity income | |||
Cash | |||
Investment | |||
Investment Account Balance: | |||
Amount | |||
1/1/xx Balance | |||
Additions: | |||
Deductions: | |||
(express as negative) | |||
12/31/xx Balance | 0 |
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