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26 January, 19:12

Micron owns 35% of Martok. Martok pays a total of $47,000 in cash dividends for the period. Micron's entry to record the dividend transaction would include a:

Credit to Long-Term Investments for $16,450.

Debit to Long-Term Investments for $16,450.

Debit to Cash for $47,000.

Credit to Cash for $16,450.

Credit to Investment Revenue for $47,000.

Everrine Corporation owns 3,000 shares of JRW Corporation. JRW Corporation has 25,000 shares of stock outstanding. JRW paid $4 per share in cash dividends to its stockholders. The entry to record the receipt of these dividends is:

Debit Cash, $12,000; credit Long-Term Investments, $12,000.

Debt Long-Term Investment, $12,000; credit Cash, $12,000.

Debit Cash, $12,000; credit Dividend Revenue, $12,000. Debit Unrealized Gain-Equity, $12,000; credit Cash, $12,000.

Debit Cash, $12,000; credit Unrealized Gain-Equity, $12,000.

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Answers (1)
  1. 26 January, 19:24
    0
    1. Option (A) is correct.

    2. Option (C) is correct.

    Explanation:

    1. Micron's entry to record the dividend transaction is as follows:

    Cash A/c Dr. $16,450

    To Long - Term Investments $16,450

    (In this case, since the holding interest is more than 20%, Equity method is used)

    workings:

    Dividend = $47,000 * 35%

    = $16,450

    2. The entry to record the receipt of dividend would be:

    Cash A/c Dr. $12,000

    To Dividend Revenue A/c $12,000

    (To record the receipt of dividend)

    Workings:

    Dividend = 3,000 shares * $4 per share

    = $12,000
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Home » Business » Micron owns 35% of Martok. Martok pays a total of $47,000 in cash dividends for the period. Micron's entry to record the dividend transaction would include a: Credit to Long-Term Investments for $16,450. Debit to Long-Term Investments for $16,450.
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