Problem 4-1

On January 1, 2011, Perelli Company purchased 90,000 of the 100,000 outstanding shares of common stock of Singer Company as a long-term investment. The purchase price of $5,007,700 was paid in cash. At the purchase date, the balance sheet of Singer Company included the following:

Current assets		$2,942,200
Long-term assets		3,916,100
Other assets		763,400
Current liabilities		1,568,200
Common stock, $20 par value		2,002,100
Other contributed capital		1,878,200
Retained earnings		1,614,200

Additional data on Singer Company for the four years following the purchase are:

		2011		2012		2013			2014
Net income (loss)		$2,012,800		$472,400		($180,900	)		($321,500	)
Cash dividends paid, 12/30		497,200		497,200		497,200			497,200

Prepare journal entries under each of the following methods to record the purchase and all investment-related subsequent events on the books of Perelli Company for the four years, assuming that any excess of purchase price over equity acquired was attributable solely to an excess of market over book values of depreciable assets (with a remaining life of 15 years). (Assume straight-line depreciation.)

(a)

	Your answer is partially correct. Try again.

Perelli uses the cost method to account for its investment in Singer. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

please answer only B. thank you:)

Date Account Titles and Explanation Debit Credit 2011 Investment in Subsidiary 5007700 Cash 5007700 (To record the investment) cash 447480 Dividend Income 447480 (To record dividend income) 2012 Cash 447480 Dividend Income 447480 2013 Cash 447480 Dividend Income 447480 2014 Cash 447480 x Dividend Income 402732 Investment in Subsidiai 29600 (b) Perelli uses the partial equity method to account for its investment in Singer. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit 2011 (To record the investment) (To record dividend income) (To record equity income (loss)) 2012 (To record dividend income) (To record equity income (loss)) 2013 (To record dividend income) (To record equity income (loss)) 2014 (To record dividend income) (To record equity income (loss))