On January 1, 2021, Cullumber Company, a public company, purchased 30% of the common shares of...

On January 1, 2021, Cullumber Company, a public company, purchased 30% of the common shares of Triple Titanium Inc. for $500,000. The remaining shares (70%) are held by the family members of the company’s founder. Cullumber considers this a strategic investment and a critical step into developing consumer markets. Triple Titanium is currently a supplier to Cullumber. Cullumber placed two members on the 10-person board of directors of Triple Titanium and the two members believe they have been influential on the board through the year. Cullumber and Triple Titanium both have December 31 year ends.

During 2021, Triple Titanium reported profit of $230,000 and paid total dividends of $85,000.

1)

Prepare the following journal entries for Cullumber, assuming significant influence does exist. (Credit account titles are automatically indented when the 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.)

1.		The acquisition of the investment
2.		Investment revenue and receipt of dividends related to the investment

2)

During 2022, Triple Titanium reports profit of $220,000 and pays total dividends of $70,000.

Prepare the required journal entries related to these transactions on Cullumber’s books. (Credit account titles are automatically indented when the 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.)

Determine the balance in the investment account on December 31, 2021, and December 31, 2022.

4) Show how the investment account and related revenue accounts would be reported on the financial statements for December 31, 2021.

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Expert Solution

ekkarill92 answered 1 year ago

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