MD-1 Recording Equity Method Securities Transactions On January 2, Ubuy.com paid
ID: 2535871 • Letter: M
Question
MD-1 Recording Equity Method Securities Transactions
On January 2, Ubuy.com paid $250,000 to acquire 20 percent (25,000 shares) of the common stock of E-Net Corporation. The accounting period for both companies ends December 31.
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.)
On January 2, Ubuy.com paid $250,000 to acquire 20 percent (25,000 shares) of the common stock of E-Net Corporation. The accounting period for both companies ends December 31.
Explanation / Answer
Date Account Description Debit Credit 2-Jan Investment In Ubuy 250,000.00 Cash 250,000.00 (Being (25,000 shares) of the common stock of E-Net Corporation Purchased) 2-Jul Cash 75,000.00 Investment In Ubuy 75,000.00 (Being cash dividend of $3 per share received) 31-Dec Investment In Ubuy 70,000.00 To Revenue from Investment 70,000.00 (Being Income from Investment recognised)
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