On January 1, 2012, Meredith Corporation purchased 20% of the common shares of P

Question

On January 1, 2012, Meredith Corporation purchased 20% of the common shares of Pirates Company for $438,000. During the year, Pirates earned net income of $175,200 and paid dividends of $43,800.
Prepare the entries for Meredith to record the purchase and any additional entries related to this investment in Pirates Company in 2012. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation Debit Credit

(To record purchase of stock.)
(To record receipt of dividends.)
(To record revenue.)

Explanation / Answer

INvestments A/c............Dr 438000 To cash 438000 (being 20% of common stock of Pirates company acquired) Cash A/c......Dr 8760 To investments 8760 (being dividend received) Investments A/c...........Dr 35040 To revenue 35040 (being revenue recorded)

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