Question

6&7

Equity method TALGO Instructions Chart of Accounts Instructions TALGO On January 2. Yorkshire Company qurd 40% of the outstanding stock of Fain Company for $754.500. For the year ended December 31, Fan eamed income of $110,400 and paid dividends of $29.700. TALGO. Journalize the entries for Yorkshire Company for the purchase of the stock the share of an income, and the dividends received from Fan Company Refer to the Chart of Accounts for exact wording of accounts TALGO . < ETAL.

Answer 1

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Question 1
Date	Account	Debit	Credit
Jan 2	Investment in Fain Company Stock	$       754,500
	Cash		$       754,500
	(To record purchase of investment)
Dec 31	Investment in Fain Company Stock	$         48,576
	Income from Fain Company		$         48,576
	(To record income from Fain) $110,400*44%
Dec 31	Cash	$         13,068
	Investment in Fain Company Stock		$         13,068
	(To record Dividend from Fain) $29,700*44%
Question 2
Date	Account	Debit	Credit
Jan 4	Investment in Flington Company Stock	$   3,600,000
	Cash		$   3,600,000
	(To record purchase of investment) 80,000*$45
Jul 31	Cash	$         78,400
	Investment in Flington Company Stock		$         78,400
	(To record Dividend from Fain) $196,000*80,000/200,000
Dec 31	Investment in Fain Company Stock	$       298,800
	Income from Fain Company		$       298,800
	(To record income from Fain) $747,000*80,000/200,000
Part b	Initial Acquisition Cost		$   3,600,000
	Dividend		$       (78,400)
	Income		$       298,800
	Investment in Flington Company Dec 31		$   3,820,400