Use the following information for questions 105 and 106.
Brown Corporation earns $480,000 and pays cash dividends of $160,000 during 2014. Dexter Corporation owns 3,000 of the 10,000 outstanding shares of Brown.
-What amount should Dexter show in the investment account at December 31, 2014 if the beginning of the year balance in the account was $640,000?

Question

Quizplus · Accepted Answer

Dexter owns 30% (3,000/10,000) of Brown's outstanding shares, so they would receive 30% of the dividends paid, or $48,000 (30% x $160,000). Therefore, their ending balance in the investment account would be $688,000 ($640,000 + $480,000 - $160,000 + $48,000).

Use the Following Information for Questions 105 and 106