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Saved Help Save &Exit Sub Check my work Adams, Inc, acquires Clay Corporation on January 1,2017, in exchange for $555,500 cash. Immediately after the acquisition,
Saved Help Save &Exit Sub Check my work Adams, Inc, acquires Clay Corporation on January 1,2017, in exchange for $555,500 cash. Immediately after the acquisition, the two owing account balances. Clay's equipment (with a five year remaining life) is actually worth $487,300. Credit balances are indicated by parentheses. Adams Clay Current assets Investment in Clay Equipment Liabilities Common stock Retained earnings, 1/1/17 $422,000 285,000 555, 500 27,300 (286, 000) (221,000) (350, 000) 150,000) 430,000 (1,068,800) (344,000) In 2017, Clay earns a net income of $69,300 and declares and pays a $5,000 cash dividend. In 2017, Adams reports net income from its own operations (exclusive of any income from Clay) of $175,000 and declares no dividends. At the end of 2018, selected account balances for the two companies are as follows: Adams clay 201,000 (408,300) Revenues Expenses Investment income Retained earnings, 1/1/18 Dividends declared Common stock Current assets Investment in Clay Equipment Liabilities $ (510,000) $(268,000) 369,750 Not given Not given 8,000 331,800 488,800 (350, 000) (150,000) 798,000 Not given 641,800 (218, 800) (186,800) a. What are the December 31, 2018, Investment Income and Investment in Clay account balances assuming Adams uses the: . Equity method.
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