Fox Co. purchased 10,000 shares (2% ownership) of Owl Corp. on February 14. Fox received a stock dividend of 2,000 Owl shares on the following April 30, when the market value per share was $35. Owl paid a cash dividend of $2 per share on December 15, the same year. In its income statement for this year, what amount should Fox report as dividend income?

Question

Lilliana Hoffman

Business

17 September, 19:12

Fox Co. purchased 10,000 shares (2% ownership) of Owl Corp. on February 14. Fox received a stock dividend of 2,000 Owl shares on the following April 30, when the market value per share was $35. Owl paid a cash dividend of $2 per share on December 15, the same year. In its income statement for this year, what amount should Fox report as dividend income?

+5

Answers (1)

Know the Answer?

Melany Blevins · Answer 1

Fox Co. shall report dividend income of $24,000 in its income statement prepared for the year.

Explanation:

Total number of held by the Fox Co. of Owl Corp during the year:

Number of shares purchased on February 14: 10,000

Number of shares received as stock dividend on April 30: 2,000

Total shares held by the Fox Co. 12,000

Dividend paid by the Owl Corp during the year=$2 per share

Total dividend to be received by Fox Co. (2*12000) = $24,000

Fox Co. shall report dividend income of $24,000 in its income statement prepared for the year.