Rosen Company purchased 35,000 shares of common stock of Corporation as a long-term investment for $700,000. During the year, Polo Corporation reported net income of $300,000 and paid dividends of $100,000.
Instructions
(a) Assuming that the 35,000 shares represent a 10% interest in Polo Corporation:
1. Prepare the journal entry to record the investment in Polo stock.
2. Prepare any entries that Rosen Company should make in accounting for its investment in Polo stock during the year.
3. What is the balance of the Stock Investments account on Rosen Company's books at the end of the year?
(b) Repeat requirement (a) above except assume that the 35,000 shares represent a 20% interest in Polo Corporation.

Question

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The Answer of Rosen Company purchased 35,000 shares of common stock of Corporation as a long-term investment for $700,000. During the year, Polo Corporation reported net income of $300,000 and paid dividends of $100,000.
Instructions
(a) Assuming that the 35,000 shares represent a 10% interest in Polo Corporation:
1. Prepare the journal entry to record the investment in Polo stock.
2. Prepare any entries that Rosen Company should make in accounting for its investment in Polo stock during the year.
3. What is the balance of the Stock Investments account on Rosen Company's books at the end of the year?
(b) Repeat requirement (a) above except assume that the 35,000 shares represent a 20% interest in Polo Corporation.

Rosen Company Purchased 35,000 Shares of Common Stock of Corporation