Reden Corporation purchased 40 percent of Montgomery Company’s common stock on January 1, 20X9, at underlying book value of $262,400. Montgomery’s balance sheet contained the following stockholders’ equity balances: Preferred Stock ($4 par value, 42,000 shares issued and outstanding) $ 168,000 Common Stock ($1 par value, 145,000 shares issued and outstanding) 145,000 Additional Paid-In Capital 189,000 Retained Earnings 322,000 Total Stockholders’ Equity $ 824,000 Montgomery’s preferred stock is cumulative and pays a 5 percent annual dividend. Montgomery reported net income of $95,000 for 20X9 and paid total dividends of $46,000. Required: Give the journal entries recorded by Reden Corporation for 20X9 related to its investment in Montgomery Company common stock. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Reden Corporation purchased 40 percent of Montgomery Company’s common stock on January 1, 20X9, at underlying book value of $262,400. Montgomery’s balance sheet contained the following stockholders’ equity balances: Preferred Stock ($4 par value, 42,000 shares issued and outstanding) $ 168,000 Common Stock ($1 par value, 145,000 shares issued and outstanding) 145,000 Additional Paid-In Capital 189,000 Retained Earnings 322,000 Total Stockholders’ Equity $ 824,000 Montgomery’s preferred stock is cumulative and pays a 5 percent annual dividend. Montgomery reported net income of $95,000 for 20X9 and paid total dividends of $46,000. Required: Give the journal entries recorded by Reden Corporation for 20X9 related to its investment in Montgomery Company common stock. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Chapter6: Corporations: Redemptions And Liquidations
Section: Chapter Questions
Problem 45P
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Reden Corporation purchased 40 percent of Montgomery Company’s common stock on January 1, 20X9, at underlying book value of $262,400. Montgomery’s balance sheet contained the following
| $ 168,000 | |
| Common Stock ($1 par value, 145,000 shares issued and outstanding) | 145,000 |
| Additional Paid-In Capital | 189,000 |
| 322,000 | |
| Total Stockholders’ Equity | $ 824,000 |
Montgomery’s preferred stock is cumulative and pays a 5 percent annual dividend. Montgomery reported net income of $95,000 for 20X9 and paid total dividends of $46,000.
Required:
Give the journal entries recorded by Reden Corporation for 20X9 related to its investment in Montgomery Company common stock.
Note: If no entry is required for a transaction/event, select "No
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