Marjam Company owns 30,000 shares of MacKenzie Company's 100,000 outstanding shares of common stock.MacKenzie Company pays $25,000 in total cash dividends to its shareholders.Marjam's entry to record this transaction should include a:
A)Credit to Dividend Revenue for $7,500.
B)Credit to Interest Revenue for $25,000.
C)Credit to Equity Method Investments for $7,500.
D)Credit to Equity Method Investments for $25,000.
E)Credit to Dividend Revenue for $25,000.

Question

Quizplus · Accepted Answer

Marjam Company owns 30% of MacKenzie Company's outstanding shares, so Marjam's share of the cash dividends is $7,500 (30% x $25,000). The entry to record this transaction should include a credit to Equity Method Investments for $7,500.

Marjam Company Owns 30,000 Shares of MacKenzie Company's 100,000 Outstanding