Madison Corporation purchased 40% of Jay Corporation for $125,000 on January 1.On June 20 of the same year,Jay Corporation declared total cash dividends of $30,000.At year-end,Jay Corporation reported net income of $150,000.The balance in Madison Corporation's Long-Term Investment-Jay Corporation account as of December 31 should be:

Question

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Madison Corporation's investment is accounted for using the equity method since it owns 40% of Jay Corporation. The initial investment is $125,000. Madison's share of Jay's net income is 40% of $150,000, which is $60,000. Madison's share of the dividends is 40% of $30,000, which is $12,000. The balance is calculated as $125,000 + $60,000 - $12,000 = $173,000.

Madison Corporation Purchased 40% of Jay Corporation for $125,000 on January