On January 1, 2019, X Inc. purchased 12% of the voting shares of Y Inc. for $100,000. The investment is reported at cost. X does not have significant influence over Y. Y’s net income and declared dividends for the following three years are as follows: Net Income Dividends 2019 $50,000 $20,000 2020 $70,000 $80,000 2021 $30,000 $60,000 Required a- Prepare

Sep 8, 2023

On January 1, 2019, X Inc. purchased 12% of the voting shares of Y Inc. for $100,000. The investment is reported at cost. X does not have significant influence over Y. Y’s net income and declared dividends for the following three years are as follows:

Net Income Dividends
2019 $50,000 $20,000
2020 $70,000 $80,000
2021 $30,000 $60,000

Required

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On January 1, 2019, X Inc. purchased 12% of the voting shares of Y Inc. for $100,000. The investment is reported at cost. X does not have significant influence over Y. Y’s net income and declared dividends for the following three years are as follows: Net Income Dividends 2019 $50,000 $20,000 2020 $70,000 $80,000 2021 $30,000 $60,000 Required a- Prepare
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a- Prepare  journal entries to record X’s acquisition of Y’s shares on January 1, 2019?

b- Prepare journal entries to record X’s share of Y’s net income for 2019?

c-Prepare journal entries to record X’s share of Y’s dividends paid for 2019?

d-Prepare journal entries  to record X’s share of Y’s dividends paid for 2020?

e-Prepare journal entries to record X’s share of Y’s dividends paid for 2021?

f-What would be the carrying value of X’s Investment in Y at the end of 2021?

g-Prepare journal entries  to record X’s acquisition of Y’s shares?

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