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At a total cost of $6,950,000, Herrera Corporation acquired 229,500 shares of Tran Corp. common stock as a long-term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 850,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. Required: A. Journalize the entries by Herrera Corporation on December 31 to record the following information (refer to the Chart of Accounts for exact wording of account titles): 1. Tran Corp. reports net income of $974,000 for the current period. 2. A cash dividend of $0.28 per common share is paid by Tran Corp. during the current period. stment? DEBIT 262,980.00 Score: 51/51 CREDIT Shaded cells have feedback. PAGE 10 ACCOUNTING EQUATION ASSETS ↑ LIABILITIES EQUITY

At a total cost of $6,950,000, Herrera Corporation acquired 229,500 shares of Tran Corp. common stock as a long-term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 850,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. Required: A. Journalize the entries by Herrera Corporation on December 31 to record the following information (refer to the Chart of Accounts for exact wording of account titles): 1. Tran Corp. reports net income of $974,000 for the current period. 2. A cash dividend of $0.28 per common share is paid by Tran Corp. during the current period. stment? DEBIT 262,980.00 Score: 51/51 CREDIT Shaded cells have feedback. PAGE 10 ACCOUNTING EQUATION ASSETS ↑ LIABILITIES EQUITY

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 25E
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nen Instructions At a total cost of $6,950,000, Herrera Corporation acquired 229,500 shares of Tran Corp. common stock as a long-term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 850,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. Required: A. Journalize the entries by Herrera Corporation on December 31 to record the following information (refer to the Chart of Accounts for exact wording of account titles): 1. Tran Corp. reports net income of $974,000 for the current period. 2. A cash dividend of $0.28 per common share is paid by Tran Corp. during the current period. stment? DEBIT 262,980.00 ✓ Score: 51/51 CREDIT 262,980.00 Shaded cells have feedback. PAGE 10 ↑ ACCOUNTING EQUATION ASSETS LIABILITIES EQUITY
Transcribed Image Text:nen Instructions At a total cost of $6,950,000, Herrera Corporation acquired 229,500 shares of Tran Corp. common stock as a long-term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 850,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. Required: A. Journalize the entries by Herrera Corporation on December 31 to record the following information (refer to the Chart of Accounts for exact wording of account titles): 1. Tran Corp. reports net income of $974,000 for the current period. 2. A cash dividend of $0.28 per common share is paid by Tran Corp. during the current period. stment? DEBIT 262,980.00 ✓ Score: 51/51 CREDIT 262,980.00 Shaded cells have feedback. PAGE 10 ↑ ACCOUNTING EQUATION ASSETS LIABILITIES EQUITY
Instructions Chart of Accounts Journal Final Question Final Question B. Why is the equity method appropriate for the Tran Corp. investment? Herrera's investment in Tran Corp. represents investment amount between Journal 1 investee is presumed to represent significant influence. The equity method is the investor can exercise significant influence over the investee. 2 3 4 DATE Dec. 31 Dec. 31 ✓ and Cash Investment in Tran Corp. Stock Income of Tran Corp. DESCRIPTION Shaded cells have feedback. of the outstanding shares of Tran Corp. An of the outstanding common stock of the Investment in Tran Corp. Stock JOURNAL Points: ✓ ✓ POST. REF. when 0/4 DEBIT Instructions At a total cost of $6,950,000, Her long-term investment. Herrera Co has 850,000 shares of common s 262,980.00 64,260.00 Required: A. Journalize the entries by (refer to the Chart of Acco 1. Tran Corp. reports net 2. A cash dividend of $0. ✓ ✓ Score: 51/51 CREDIT 262,980.00 64,260.00 ASSE ↑ ↓
Transcribed Image Text:Instructions Chart of Accounts Journal Final Question Final Question B. Why is the equity method appropriate for the Tran Corp. investment? Herrera's investment in Tran Corp. represents investment amount between Journal 1 investee is presumed to represent significant influence. The equity method is the investor can exercise significant influence over the investee. 2 3 4 DATE Dec. 31 Dec. 31 ✓ and Cash Investment in Tran Corp. Stock Income of Tran Corp. DESCRIPTION Shaded cells have feedback. of the outstanding shares of Tran Corp. An of the outstanding common stock of the Investment in Tran Corp. Stock JOURNAL Points: ✓ ✓ POST. REF. when 0/4 DEBIT Instructions At a total cost of $6,950,000, Her long-term investment. Herrera Co has 850,000 shares of common s 262,980.00 64,260.00 Required: A. Journalize the entries by (refer to the Chart of Acco 1. Tran Corp. reports net 2. A cash dividend of $0. ✓ ✓ Score: 51/51 CREDIT 262,980.00 64,260.00 ASSE ↑ ↓
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