Superior Company owns 40% of the outstanding stock f Bernard Company. During 2018, Bernard paid $100,000 cash dividend on its common shares. What effect did this dividend have on SUperior's 2018 financial statements?
Working Notes: 1 | ||||
Total investment Share in F Bernard Company | 40% | |||
Total Dividend Declared by Bernard Company | $1,00,000 | |||
Dividend received by Superior Company = $ 100,000 X 40% = | $40,000 | |||
Solution: | ||||
Jounral entry of the same is posted as below by superior company | ||||
Journal Entries | ||||
Sr. No. | Date | Account Title and explanation | Debit | Credit |
1 | 2018 | Cash | $40,000 | |
Investment f Bernard Company | $40,000 | |||
(To record the receipt of share in dividends) | ||||
It means investment value in Bernard company is reduced by $ 40,000 and cash balance is increase by $ 40,000 | ||||
Answer = | Effect on Financial Statement of Superior 's 2018 Financial statement is as below, | |||
Investment in f Bernard company reduced by | $ 40,000 | |||
Cash balance is increased by | $ 40,000 | |||
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