On January 1, 2017, Waterway Corporation purchased 20% of the common shares of Wildhorse Company for...
On January 1, 2017, Waterway Corporation purchased 20% of the common shares of Wildhorse Company for $206,000. During the year, Wildhorse earned net income of $83,000 and paid dividends of $20,750. Prepare the entries for Waterway to record the purchase and any additional entries related to this investment in Wildhorse 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.) (To record revenue.)
Homework Answers
Entry 1
Investment in Wildhorse 206000
To Bank 206000
Entry 2
Bank 4150 (20750*20%)
To Dividend Income 4150
Entry 3
Investment in Wildhorse 12450 (83000-20750)*.2
To Profit and Loss 12450
This is a investment in associate and the working of the same is prepared as per equity method.
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