Pina Co. invested $1,090,000 in Grouper Co. for 25% of its outstanding stock, Gr

Question

Pina Co. invested $1,090,000 in Grouper Co. for 25% of its outstanding stock, Grouper Co. pays out 40% of net income in dividends each year. Use the information in the following T-account for the investment in Grouper to answer the following questions. Investment in Grouper Co 1,090,000 102,000 40,800 (a) How much was Pina Co.'s share of Grouper Co.'s net income for the year? Net income s (b) What was Grouper Co.'s total net income for the year? Total net income (c) What was Grouper Co.'s total dividends for the year? Total Dividends (d) How much was Pina Co.'s share of Grouper Co.'s dividends for the year? Dividends Ques

Explanation / Answer

1. Pina Co.'s Share of Grouper Co's Net Income = $102000

2. Grouper Co.'s Total Net Income = Pina co's Share / 25%

Grouper Co.'s Total Net Income = 102000 / 25%

Grouper Co.'s Total Net Income = $408000

3. Grouper Co.'s Total Dividends = Total Net Income * 40%

Grouper Co.'s Total Dividends = 408000 * 40%

Grouper Co.'s Total Dividends = $163200

4. Pina Co.'s Share of Grouper Co,'s Dividends = Total Dividend * 25%

Pina Co.'s Share of Grouper Co,'s Dividends = 163200* 25%

Pina Co.'s Share of Grouper Co,'s Dividends = $40800

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