ACC 557 Week 8 Chapter 12 E12 7 E12 8 E12 12 P12 2A
EXERCISE 12-7
(a) Jan. 1 Stock Investments..................................... 180,000
Cash..................................................... 180,000
Dec. 31 Cash ($60,000 X 25%)............................... 15,000
Stock Investments............................. 15,000
31 Stock Investments..................................... 50,000
Revenue from Stock Investments
($200,000 X 25%)............................. 50,000
(b) Investment in Morelli, January 1.......................................... $180,000
Less: Dividend received....................................................... 15,000
Plus: Share of reported income................................................. 50,000
Investment in Morelli, December 31.................................... $215,000
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Exercise 12-7
On January 1, Vince Corporation purchased a 25% equity in Morelli Corporation for $180,000. At December 31, Morelli declared and paid a $60,000 cash dividend and reported net income of $200,000.
(a)
Your answer is correct.
Journalize the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
Jan. 1
Dec. 31
(To record dividends received)
Dec. 31
(To record equity in Morelli Corporation's net income)
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(b)
Your answer is correct.
Determine the amount to be reported as an investment in Morelli stock at December 31.
Investment in Morelli December 31
$
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