On January 1, 2017, Sage Corporation purchased 20% of the common shares of Prong

Question

On January 1, 2017, Sage Corporation purchased 20% of the common shares of Pronghorn Company for $194,000. During the year, Pronghorn earned net income of $82,000 and paid dividends of $20,500.

Prepare the entries for Sage to record the purchase and any additional entries related to this investment in Pronghorn Company in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

(To record purchase of stock.)

(To record receipt of dividends.)

Account Titles and Explanation

Debit

Credit

(To record purchase of stock.)

(To record receipt of dividends.)

Explanation / Answer

Prepare the entries for Sage to record the purchase and any additional entries related to this investment in Pronghorn Company in 2017

Date accounts & explanation debit credit Investment in Pronghorn Company 194000      Cash 194000 (To record purchase of stock.) Cash (20500*20%) 4100     Dividend revenue 4100 (To record receipt of dividends.)

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