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22 January, 10:31

During the current year, Awning Company reported investment revenue of $4,000 from long-term investments reported using the equity method. The long-term investments account had a beginning balance of $10,000 and an ending balance of $11,000. What was the amount of cash revenue received from these investments?

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  1. 22 January, 10:42
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    cash dividends: 3,000

    Explanation:

    We can solve for cash dividends based on how the equity method works:

    Beginning investing

    + proportional net income

    - cash dividends received

    Ending investing

    beginning + inomce - dividends = ending

    10,000 + 4,000 - cash dividends = 11,000

    cash dividends = 14,000 - 11,000

    cash dividends = 3,000

    when received, the journal entry for the dividends was as follow:

    cash 3,000 debit

    investing 3,000 credit

    to record cash received from investment
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