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As a long-term investment at the beginning of the 2021 fiscal year, Florists International purchased 20% of Nursery Supplies Inc.'s 20 million shares for $69 million. The fair value and book value of the shares were the same at that time. During the year, Nursery Supplies earned net income of $40 million and distributed cash dividends of $1.50 per share. At the end of the year, the fair value of the shares is $65 million.

Required:
Prepare the appropriate journal entries from the purchase through the end of the year.

Respuesta :

Tundexi

Answer:

Date   Account title and Explanation                 Debit             Credit

          Investment in nursery supplies share    $69 million

                Cash                                                                          $69 million

          (To record equity investment)

           Investment in nursery supplies share    $8 million

           (40 million*20%)

                  Investment revenue                                                $8 million

           (To record share in net income reported by N' supplies)

           Cash                                                          $7.5 million

           (20 million*25%*1.50)

                  Investment in nursery supplies share                    $7.5 million

           (To record share in dividend received from N' supplies)

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