On January 1 of the current year, PurchaseAgent.com acquired 40 percent (1,500,000 shares) of the common stock of E-Transaction Corporation. The accounting period for both companies ends December 31.
July 2 E-Transaction declared and paid a cash dividend of $5 per share.
Dec. 31 E-Transaction reported net income of $410,000.
Prepare the journal entries for each of the following transactions that occurred during the current year
Darshita Changed status to publish July 26, 2020
Answer:
| Date | Description | Debit $ | Credit $ |
| Dec,-o2 | Cash | 7500000 | |
| Investment in affiliates | 7500000 | ||
| (1,500,000 × $5 = $7,500,000) | |||
| Dec,-15 | Investment in affiliates | 164000 | |
| Equity in affiliates earning | 164000 | ||
| (40% × 410,000 = 164,000) |
Darshita Changed status to publish July 26, 2020
