On January 1 2017 Alpha Company purchased a significant infl

On January 1, 2017, Alpha Company purchased a significant influence shares investment in the Bravo-Zulu Company for $250,000. This investment balance represents 40% of the equity of the Bravo-Zulu Company. During 2017, Bravo-Zulu Company reported Net Income of $25,000 on November 15, 2017 Bravo-Zulu Company paid cash dividends of $10,000 to its shareholders. Use this information to prepare the January 1, November 15 and December 31, 2017 General Journal entry (without explanation.) If no entry is required, then write \"No Entry Required.\"

Solution

Answer

Date

Dr.$

Cr. $

Jan 1, 17

Investment

250,000

Cash

250,000

Nov. 15, 17

Cash

2,500

Investment (10,000 * 25%)

2,500

Dec. 31, 17

Long Term Investment

6,250

Investment

6,250

Note:-

Profit is declared at the end of the year, that’s why the entry for profit adjustment will be at the end of the year i.e. On December 31^st 2017.