Brankov Company purchased common stock in Ramona Company for $400,000. In the cu
ID: 2416149 • Letter: B
Question
Brankov Company purchased common stock in Ramona Company for $400,000. In the current year, Ramona Company reported net income of $50,000 and paid a dividend of $32,000. At the end of the year, the market value of the investment in Ramona Company was $410,000. A) Assume Brankov Company owns 10% of the shares of Ramona Company. Brankov Company considers the investment to be available-for-sale securities. Show the effects of the transactions above on the accounts of Brankov Company using the balance sheet equation. B) Assume Brankov Company owns 25% of the shares of Ramona Company. Show the effects of the transactions above on the accounts of Brankov Company using the balance sheet equation.
Explanation / Answer
Answer:A)
Common stock=40000
Dividend=3200
Answer:B)
Common stock=100000
Dividend=8000