Homework Answers
Requirement a:
| Date | Account title and Explanation | Debit | Credit |
| 1/1/2018 | Investment in Winters Corp. | $800,000 | |
| Cash | $800,000 | ||
| [To record investment in Winters Corp.] |
Requirement b:
| Date | Account title and Explanation | Debit | Credit |
| 10/1/2018 | Cash* | $28,800 | |
| Dividend income | $28,800 | ||
| [To record income from investment] |
*Cash received = Total dividend paid by Winters Corp. x % of holding = $360,000 x 8% = $28,800
Requirement c:
| Winters Corp fair value on 12/31/2018 | $11,600,000 |
| x Share of SINK Company | 8% |
| = Investment in Winters Corp. on 12/31/2018 | $928,000 |
Thus, Balance in the investment in Winters Corp. as 12/31/2018 is $928,000.
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3. SINK Company paid $800,000 for 8% of the common stock of Winters Corp. on 1/1/2018....
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