Harmon Company owns 25% of the stock of Jackson Corp. which is 12,000 outstanding shares. The...
Harmon Company owns 25% of the stock of Jackson Corp. which is 12,000 outstanding shares. The Shares were purchased for $120,000 at the beginning of the year in 2018. During 2018, Harmon earns $1,400,000 in net income and pays dividends of $4 per share. (A) record the investment, (B) record the receipt of dividends, and (c) record the net income.
Homework Answers
| S.no | Particulars | Debit | Credit |
| a | Investment - Shares in Jackson Corp | $ 120,000.00 | |
| Cash | $ 120,000.00 | ||
| (being investment made in Jackson Corp recorded) | |||
| b | Dividends | $ 400,000.00 | |
| Cash | $ 400,000.00 | ||
| (being dividends @ $4/share paid on 100,000 shares of Harmon Company) | |||
| c | Net Income | $ 1,400,000.00 | |
| Retained earnings | $ 1,400,000.00 | ||
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