Question
Please explain how to solve ASAP. (All answers are correct!) An investor paid $70,200 on January 1, 2018, to acquire 25% of MaverickMan, Inc.'s outstanding
Please explain how to solve ASAP. (All answers are correct!)
An investor paid $70,200 on January 1, 2018, to acquire 25% of MaverickMan, Inc.'s outstanding common stock. The investor had significant control of MaverickMan, Inc. For the year ending December 31, 2018, MaverickMan's net income was $120,000, and on June 14, the company declared and paid cash dividends of $45,000 to all stockholders. Journalize the investor's transactions related to the MaverickMan investment: (a) purchase of the investment, (b) receipt of dividends, (c) investor's share of net income, and (d) sale of MaverickMan stock for $91,550 on January 3, 2019.
(a) The investor's purchase of the Maverick-Man investment. Investor paid 70,200 2018 Jan 1 Equity Investments--Maverick-Man Inc 70,200 Cash 70,200 Purchased investment in stock (equity method) b) Journalize receipt of dividends. On June 14, Maverick-Man declared and paid cash dividends of $45,000 2018 Jan 1 Cash 11,250 Equity Investments--Maverick-Man Inc 11,250? Purchased cash dividends (equity method) c) Journalize the investor's share of net income. 2018 Dec 31 Equity Investments--Maverick-Man Inc 30,000 Revenue from Investments 30,000 Recorded revenue earned from investment (equity method) d) Journalize the sale of Maverick-Man stock for 91,550 on January 3, 2019. 2019 Jan 3 Cash 91,550 Equity Investments--Maverick-Man, ind Gain on Disposal Disposed of Investment in stock (equity method) 88,950? 2,600Step by Step Solution
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