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On January 1st, 2022, Motors Inc. bought 30% of the outstanding stock of Bicycle Inc. for $6,000,000. Bicycle Inc. also paid a dividend of $100,000

  • On January 1st, 2022, Motors Inc. bought 30% of the outstanding stock of Bicycle Inc. for $6,000,000. Bicycle Inc. also paid a dividend of $100,000 to all shareholders on December 31st, 2022. Additionally, as of December 31st, 2022, Bicycle Inc. reported Net Income of $2,000,000. 

  • a. Record all journal entries of Motors Inc. with respect to Bicycle Inc. stock for the year 2022.
  • b. What method of accounting for equity investments will Motors Inc. use?

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