P1. XYZ Company had the following transactions related to ABC Company over a two

Question

P1. XYZ Company had the following transactions related to ABC Company over a two-year period: Year 1 1. On January 1, XYZ purchased 35% ownership of ABC Company for $700,000 cash. 2. ABC Company had net income of $70,000 for the year. 3. At year-end, ABC Company paid its shareholders dividends of $60,000. Year 2 1. XYZ Company purchased on January 1 an additional 5% of ABC Company’s stock for $75,000 cash 2. ABC Company had net income of $150,000 for the year. 3. At year-end, ABC company paid its shareholders dividends of $100,000 What amounts will appear on the financial statements? $ AMOUNTS Accounts/Descriptions Year 1 Year 2 B/S I/S SCF Evaluate the performance of your investment. (explain and show supporting amounts/calcs)

Explanation / Answer

JOURNAL ENTRIES (YEAR 1 )

JOURNAL ENTRIES (YEAR 2)

BALANCE SHEET

S.NO. PARTICULARS DEBIT CREDIT 1 INVESTMENT 700000 CASH 700000 2 INVESTMENT 24500 INVESTMENT REVENUE 24500 (700000*35%) 3 CASH 21000 INVESTMENT 21000 (60000*35%)

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.