Fill in the dollar changes caused in the Investment account and Dividend Revenue or Investment Revenue account by each of the following transactions, assuming Nash's Company uses (a) the fair value method and (b) the equity method for accounting for its investments in Swifty Company. 1. At the beginning of Year 1, Nash's bought 30% of Swifty's common stock at its book value. Total book value of all Swifty's common stock was $720,000 on this date. 2. (a) During Year 1, Swifty reported $50,000 of net income. (b) During Year 1, Swifty paid $28,000 of dividends. 3. (a) During Year 2, Swifty reported $25,000 of net income. (b) During Year 2, Swifty paid $18,000 of dividends. 4. (a) During Year 3, Swifty reported a net loss of $8,000. (b) During Year 3, Swifty paid $3,500 of dividends. 5. Indicate the Year 3 ending balance in the Investment account, and cumulative totals
Fill in the dollar changes caused in the Investment account and Dividend Revenue or Investment Revenue account by each of the following transactions, assuming Nash's Company uses (a) the fair value method and (b) the equity method for accounting for its investments in Swifty Company.
1. At the beginning of Year 1, Nash's bought 30% of Swifty's common stock at its book value. Total book value of all Swifty's common stock was $720,000 on this date.
2. (a) During Year 1, Swifty reported $50,000 of net income. (b) During Year 1, Swifty paid $28,000 of dividends.
3. (a) During Year 2, Swifty reported $25,000 of net income. (b) During Year 2, Swifty paid $18,000 of dividends.
4. (a) During Year 3, Swifty reported a net loss of $8,000. (b) During Year 3, Swifty paid $3,500 of dividends.
5. Indicate the Year 3 ending balance in the Investment account, and cumulative totals for Years 1, 2, and 3 for dividend revenue and investment revenue.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
