The summarized balance sheets of Cullumber Company and Vaughn Company as of December 31, 2021 are as follows:Cullumber CompanyBalance SheetDecember 31, 2021Assets$2440000Liabilities$310000Capital stock1220000Retained earnings910000Total equities$2440000Vaughn CompanyBalance SheetDecember 31, 2021Assets$1840000Liabilities$420000Capital stock1170000Retained earnings250000Total equities$1840000If Cullumber Company acquired a 30% interest in Vaughn Company on December 31, 2021 for $450000 and during 2022 Vaughn Company had net income of $151000 and paid a cash dividend of $61000, applying the equity method would give a debit balance in the Equity Investments (Vaughn) account at the end of 2022 of $431700.$495300.$477000.$450000.

When one company is holding shares in another company from 20% to 50% , then it is called as…

Answered: The summarized balance sheets of…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 54CE

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The summarized balance sheets of Cullumber Company and Vaughn Company as of December 31, 2021 are as follows:

Cullumber Company Balance Sheet December 31, 2021
Assets	$2440000
Liabilities	$310000
Capital stock	1220000
Retained earnings	910000
Total equities	$2440000
Vaughn Company Balance Sheet December 31, 2021
Assets	$1840000
Liabilities	$420000
Capital stock	1170000
Retained earnings	250000
Total equities	$1840000

If Cullumber Company acquired a 30% interest in Vaughn Company on December 31, 2021 for $450000 and during 2022 Vaughn Company had net income of $151000 and paid a cash dividend of $61000, applying the equity method would give a debit balance in the Equity Investments (Vaughn) account at the end of 2022 of

$431700.

$495300.

$477000.

$450000.

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