On January 1, 2017, XYZ Company purchased 80,000 shares of the stock of Rayco, and did obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $475,000, and represents a 30% ownership stake. Rayco made $2,748,572 of net income in 2017, and paid dividends of $155,000. The price of Rayco’s stock increased from $10 per share at the beginning of the year, to $40 per share at the end of the year.
Requirements:
Prepare the January 1 and December 31 general journal entries for XYZ Company.
How much should the XYZ Company report on the balance sheet for the investment in Rayco at the end of 2017?
| Date | Account Title | Debit | Credit |
|---|---|---|---|
| 1/1 | Account to debit | Amount | |
| Account to credit | Amount | ||
| 12/31 | Account to debit | Amount | |
| Account to credit | Amount | ||
| 12/31 | Account to debit | Amount | |
| Account to credit | Amount |
| Stock Investments Accounts Balance 12/31/17 |
|---|
| Amount |
