Question 15.3: Equity Method On January 2, Olson Company acquired 35% of th...
Equity Method
On January 2, Olson Company acquired 35% of the outstanding stock of Bryant Company for $140,000. For the year ended December 31, Bryant Company earned income of $44,000 and paid dividends of $20,000. Prepare the entries for Olson Company for the purchase of the stock, the share of Bryant income, and the dividends received from Bryant Company.
Jan. 2 Investment in Bryant Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . 140,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140,000
Dec. 31 Investment in Bryant Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . 15,400*
Income of Bryant Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,400
*Recorded 35% of Bryant income, 35% × $44,000
31 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000*
Investment in Bryant Company Stock . . . . . . . . . . . . . . . . . . . . . . 7,000
*Recorded 35% of Bryant’s $20,000 dividend, 35% × $20,000