On January 1 Sanchez Corporation purchased a 35% equity interest in Lawton Company for $380000. At December 31 Lawton declared and paid a $40000 cash dividend and reported net income of $98000. Prepare the necessary journal entries for Sanchez Corporation.

Question

Cabdullahi Abukar · Accepted Answer

Final Answer :  Jan. 1  Stock Investments  380 , 000 Cash  380 , 000 Dec.31 Cash  ( $ 40 , 000 × . 35 )   14 , 000  Stock Investments 14 , 000  Stock Investments  ( $ 98 , 000 × . 35 )   34 , 300  Revenue from Stock I nvestments 34 , 300 \begin{array}{llr}  	ext {Jan. 1 \quad Stock Investments  }  & 380,000\\quad\quad\quad\quad 	ext {Cash  }  & & 380,000\\ 	ext {Dec.31\quad Cash   (\$ 40,000 	imes .35)    }  & 14,000\\quad\quad\quad\quad 	ext {  Stock Investments}  & & 14,000\\\quad\quad\quad\quad 	ext { Stock Investments   (\$ 98,000 	imes .35)   }  & 34,300\ \quad\quad\quad\quad	ext {  Revenue from Stock I nvestments}  & & 34,300\\end{array} Jan. 1  Stock Investments  Cash  Dec.31 Cash  ( $40 , 000 × .35 )    Stock Investments  Stock Investments  ( $98 , 000 × .35 )    Revenue from Stock I nvestments ​ 380 , 000 14 , 000 34 , 300 ​ 380 , 000 14 , 000 34 , 300 ​

On January 1 Sanchez Corporation purchased a 35% equity interest in Lawton Company for $380000. At December 31 Lawton declared and paid a $40000 cash dividend and reported net income of $98000. Prepare the necessary journal entries for Sanchez Corporation.

Definitions

Learning Objectives

Learning Objectives

Related questions