On January 1, 2018, Jolley Corp. paid $250,000 for 25% of the voting common stock of...

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On January 1, 2018, Jolley Corp. paid $250,000 for 25% of the voting common stock of Tige Co. On that date, the book value of

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Answer 1

Answer #1

1. Investment in Associates A/C Dr $250,000

To Cash/Bank Account A/c Cr. $250,000

(Being purchase 25% common stock of Tige Co)

2. Cash/Bank Account A/c Dr. $10,000

To Investment in Associates A/c Dr. $10,000

(Being Dividend amount of 25% paid to Jolley Corp)

3. Jolley Share of Net income

Net Income of Tige Co.	Amount
Net Income	200,000.00
Less : Extraordinary Gain	35,000.00
Less : Profit include in jolly stock	11,000.00	(33000/150*100)
Less : Dividend Paid	40,000.00
Retained Earning	114,000.00
Jolley @25% share	28,500.00

2. Investment in Tige as on 12/31/2018

Investment in Associates
Particulars	Amount	Particulars	Amount
Cash	250,000.00	Dividend	10,000.00
Net Income of Jolley's Share	28,500.00
		Ending Balance of Investment	268,500.00
	278,500.00		278,500.00

3. Cost of investment = 268,500

Half of investment which is equal to - 134,250

Sold @ 400000	400,000.00
Less : Cost of Investment	134,250.00
Profit on Investment sold	265,750.00

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Answer 2

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On January 1, 2018, Jolley Corp. paid $250,000 for 25% of the voting common stock of...

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