On January 3, 2021, Roberts Company purchased 30% of the 100,000 shares of common stock of Thomas Corporation, paying $1,500,000. There was no goodwill or other cost allocation associated with the investment. Roberts has significant influence over Thomas. During 2021, Thomas reported net income of $300,000 and paid dividends of $100,000. On January 4, 2022, Roberts sold 15,000 shares for $800,000.What was the balance in the investment account before the shares were sold?

Question

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The investment account balance before the shares were sold is $1,560,000. This is calculated as the original investment of $1,500,000 plus the share of Thomas's net income for 2021 of $90,000 (30% x $300,000).

On January 3, 2021, Roberts Company Purchased 30% of the 100,000