Question

At a total cost of $\$ 1,820,000$, Joshua Corporation acquired 70,000 shares of Caleb Corp. common stock as a long-term investment. Joshua Corporation uses the equity method of accounting for this investment. Caleb Corp. has 280,000 shares of common stock outstanding, including the shares acquired by Joshua Corporation. Journalize the entries by Joshua Corporation to record the following information: a. Caleb Corp. reports net income of $\$ 2,500,000$ for the current period. b. A cash dividend of $\$ 3.40$ per common share is paid by Caleb Corp. during the current period.

   At a total cost of $\$ 1,820,000$, Joshua Corporation acquired 70,000 shares of Caleb Corp. common stock as a long-term investment. Joshua Corporation uses the equity method of accounting for this investment. Caleb Corp. has 280,000 shares of common stock outstanding, including the shares acquired by Joshua Corporation. Journalize the entries by Joshua Corporation to record the following information:
a. Caleb Corp. reports net income of $\$ 2,500,000$ for the current period.
b. A cash dividend of $\$ 3.40$ per common share is paid by Caleb Corp. during the current period.

Financial accounting: an integrated statements approach

Jonathan E. Duchac,… 2nd Edition

Chapter 12, Problem 20

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Step 1

Joshua Corporation owns 70,000 shares out of a total of 280,000 shares outstanding in Caleb Corp. \[ \text{Ownership Percentage} = \left(\frac{70,000}{280,000}\right) \times 100 = 25\% \] Show more…

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At a total cost of $\$ 1,820,000$, Joshua Corporation acquired 70,000 shares of Caleb Corp. common stock as a long-term investment. Joshua Corporation uses the equity method of accounting for this investment. Caleb Corp. has 280,000 shares of common stock outstanding, including the shares acquired by Joshua Corporation. Journalize the entries by Joshua Corporation to record the following information: a. Caleb Corp. reports net income of $\$ 2,500,000$ for the current period. b. A cash dividend of $\$ 3.40$ per common share is paid by Caleb Corp. during the current period.

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