The following are facts about the investments of Lester Comp

The following are facts about the investments of Lester Company You purchased 1,800 shares of Pepper Co. Stock for $37,800 Pepper has 30,000 shares outstanding. 6. 2/31/15 Pepper reported net income of $55,000 6/30/16 You received a cash dividend of $1,400 from Pepper 12/31/16 Pepper reported net income of $66,000 8/2/17 You received a cash dividend of $1,500 from Pepper What is the value of Investment in Pepper Co. Stock on 8/2/17?

Solution

Value of investment in Pepper Co. stock on 8/2/17 $42,160

Working:

Investment in Pepper Co.
Total shares outstanding	30000
Shares acquired	1800
% of shares acquired	6%
1/1/15	Cost of investment	37800
12/31/15	Share of Net income	3300
	(6% of $55,000)
6/30/16	Cash dividend received	-1400
12/31/16	Share of Net income	3960
	(6% of 66,000)
08/02/17	Cash dividend received	-1500
08/02/17	Value of investment	42160