On January 2, Ubuy.com paid $270,000 to acquire 20 percent (27,000 shares) of th

Question

On January 2, Ubuy.com paid $270,000 to acquire 20 percent (27,000 shares) of the common stock of E-Net Corporation. The accounting period for both companies ends December 31.

- July 2 E-Net declared and paid a cash dividend of $2 per share.

- Dec. 31 E-Net reported net income of $370,000.

Required: Prepare the journal entries for the purchase on January 2 and for each of the above transactions that occurred during the year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Explanation / Answer

DR CR Jul-02 Cash 10800 Investments in E- net 10800 (27000shares*.20*2) Dec-31 Investments in E- net 74000 Equity in Investee earnings(370000*.20) 74000

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