Miller Corporation acquired 30% of the outstanding common stock of Crowell Corpo
ID: 2542836 • 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?
PART A: 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.
PART B: What is the balance in Miller’s investment account on December 31, 2018? __________________
Explanation / Answer
Part A) Entries in books of Miller Dr Cr 1) For purchase of shares Investment in Crowell 160,000 Cash/ Bank 160,000 2) For dividend received on31st March Cash/ Bank 15,000 Investment in Crowell 15,000 3) For share in semiannual income as on 30th June Investment in Crowell 36,000 Share in income of Crowell 36,000 4) For dividend received on30th September Cash/ Bank 15,000 Investment in Crowell 15,000 5) For share in semiannual income as on 31st december Investment in Crowell 42,000 Share in income of Crowell 42,000 PARTB: Millers investment account Initial purchase price 160000 Add: Share of profit 78000 Less: Dividend received from Crowell -30000 Investment as on 31/12/2018 208000