Homework Answers
Option (b) $ 280,000 is Right answer
The balance of stock investment are find out on the basis of following formula
Balance on 31st December,2020
= original investment + 25% share in Net income – 25% of cash dividend paid
|
Explanation |
Amount |
|
Investment ( Original cost) |
$ 270,000 |
|
Add : 25 % share of Net Income ( $ 80,000 *25 % ) |
$ 20,000 |
|
Less : 25 % share of Cash Dividend ( $ 40,000 * 25 % ) |
( $ 10,000) |
|
Balance on 31st December, 2020 |
$ 280,000 |
.
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