In: Accounting
On January 1 Criquet Co. acquired an interest in the Tamlee Co. for $500,000. At December 31, Tamlee Co. declared and paid a cash dividend of $50,000 and reported a net income of $160,000.
REQUIRED:
Prepare the journal entries for the Criquet Co. under each of the independent circumstances:
a. Criquet Co. acquires a 10% interest in the Tamlee Co.
b. Criquet Co. acquires a 25% interest in the Tamlee Co.
a) | Jan 1 - Purchase | Investment in Tamlee Co. Stock | 500000 | |
Cash | 500000 | |||
(To record the 10% share of stock in Tamlee Co.) | ||||
Dec 31 - Income | Investment in Tamlee Co. Stock | 16000 | ||
Income of Tamlee Co. ( 160000 x 10%) | 16000 | |||
(To record the share in income on Tamlee Co.) | ||||
Dec 31- Dividends | Cash ( 50000 x 10% ) | 5000 | ||
Investment in Tamlee Co. Stock | 5000 | |||
(To record the dividend received from Tamlee Co.) | ||||
b) | Jan 1 - Purchase | Investment in Tamlee Co. Stock | 500000 | |
Cash | 500000 | |||
(To record the 25% share of stock in Tamlee Co.) | ||||
Dec 31 - Income | Investment in Tamlee Co. Stock | 40000 | ||
Income of Tamlee Co. ( 160000 x 25%) | 40000 | |||
(To record the share in income on Tamlee Co.) | ||||
Dec 31- Dividends | Cash ( 50000 x 25% ) | 12500 | ||
Investment in Tamlee Co. Stock | 12500 | |||
(To record the dividend received from Tamlee Co.) |