Question

ZZ, Inc. acquired 39% of Davis Company's common stock for $300,000 on January 1, 2018. During...

ZZ, Inc. acquired 39% of Davis Company's common stock for $300,000 on
January 1, 2018. During 2018, Davis Company reported a net income of
$180,000 and paid dividends totaling $30,000. For 2019, Davis Company
earned a net income of $150,000 and paid dividends totaling $20,000.
On December 31, 2019, ZZ, Inc. sold one-half of its investment in
Davis Company for $208,000 cash.

Calculate the balance in the investment in Davis Company account at
December 31, 2018.
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Answer #1

Balance in investment account

= 300,000 + Share in net income (180,000*39%) - Dividends (20,000*39%)

= 300,000 + 70,200 - 7,800

= 362,400

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