Miller Corporation acquired 30% of the outstanding common stock of Crowell Corpo
ID: 2542092 • Letter: M
Question
Miller Corporation acquired 30% of the outstanding common stock of Crowell Corporation for $160,000 on January 1, 2018, and obtained significant influence. The purchase price of the shares was equal to their book value. During 2018, the following information is available for Crowell:
Mar. 31 Declared and paid a cash dividend of $50,000.
June 30 Reported semiannual earnings of $120,000 for the first half of 2018.
Sept. 30 Declared and paid a cash dividend of $50,000.
Dec. 31 Reported semiannual earnings of $140,000 for the second half of 2018.
Required:
1. Prepare journal entries for Miller to reflect the preceding information. Refer to the Chart of Accounts provided for the exact wording of the answer choices for text entries.
2. What is the balance in Miller’s investment account on December 31, 2018?
Prepare journal entries for Miller to reflect the 2018 transactions. Refer to the Chart of Accounts provided for the exact wording of the answer choices for text entries. (10 Accounts in the entry)
What is the balance in Miller’s investment account on December 31, 2018? ______________
Explanation / Answer
Solution for 1:
Solution 2:
In the Book Miller Corporation as on 31st Dec 2018 Date Description Debit Credit 1-Jan-18 Investment in common stock A/c 160,000 To Cash/ Bank a/c 160,000 31-Jan-18 Cash a/c 15000 To Dividend receivable 15000 50,000*30% 30-Jun-18 Inv income receivable a/c 36000 To Inv Income a/c 36000 120,000*30% 30-Sep-18 Cash a/c 15000 To Dividend receivable 15000 50,000*30% 31-Dec-18 Inv income receivable a/c 42000 To Inv Income a/c 42000 140,000*30%