All Concerned: I need help with this problem (I am stuck). See Below:
All Concerned: I need help with this problem (I am stuck). See Below:
On January 1, 2018, Bowie Company purchased 20,000 shares of the stock of Spears Co, and did obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $200,000, and represents a 30% ownership stake. Spears made $50,000 of net income in 2018, and paid dividends of $20,000. The price of Spears’ stock increased from $10 per share at the beginning of the year, to $12 per share at the end of the year.
Requirements:
- Prepare the January 1 and December 31 general journal entries for Bowie Company.
- How much should the Bowie Company report on the balance sheet for the investment in Spears at the end of 2018?
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