On January 1,2017, Blue Corporation purchased 30% of the common shares of Kingbi
ID: 2526130 • Letter: O
Question
On January 1,2017, Blue Corporation purchased 30% of the common shares of Kingbird Company for $170,000. During the year, Kingbird earned net income of $78,000 and paid dividends of $19,500. Prepare the entries for Blue to record the purchase and any additional entries related to this investment in Kingbird Company of 2017. On January 1,2017, Blue Corporation purchased 30% of the common shares of Kingbird Company for $170,000. During the year, Kingbird earned net income of $78,000 and paid dividends of $19,500. Prepare the entries for Blue to record the purchase and any additional entries related to this investment in Kingbird Company of 2017.Explanation / Answer
Journal Entries in the Books of Blue Corporation
Investment in Kingbird A/c Dr $1,70,000
To Cash A/c Cr $1,70,000
Investment in Kingbird A/c Dr $23,400
To Investment Revenue A/c Cr $23,400
( $78,000 x 30%)
Cash A/c Dr $5,850
To Investment in Kingbird A/c Cr $5,850
($19,500 x 30%)