Zhang Corp. owns 40% of Magnor Company's common stock. Magnor pays $97,000 in total cash dividends to its shareholders. Zhang's entry to record this transaction should include a:

Question

Quizplus · Accepted Answer

Since Zhang owns 40% of Magnor, they should record their portion of the dividend payment. Therefore, the entry should include a credit to Long-Term Investments for 40% of the total dividend payment, which is $38,800. The other options are incorrect as they either do not account for the fact that Zhang owns only 40% of Magnor or they record the full amount of the dividend payment rather than Zhang's portion.