Pedro Corporation organized a 75%-owned subsidiary, Sanchez Company, on January 2, 2006. For the fiscal year ended December 31, 2006, Sanchez had a net income of $130,000 and declared and paid a dividend of $50,000 to Pedro. There were no temporary differences between Pedro's pre-tax financial income of $620,000 and taxable income from its own operations for the year ended December 31, 2006. Pedro's income tax rate is 40%.
Prepare a journal entry for Pedro Corporation on December 31, 2006, to provide for income taxes for 2006, including taxes applicable to Pedro's equity-method income from Sanchez. (Pedro is entitled to a dividend received deduction of 80% in its income tax returns.)

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The Answer of Pedro Corporation organized a 75%-owned subsidiary, Sanchez Company, on January 2, 2006. For the fiscal year ended December 31, 2006, Sanchez had a net income of $130,000 and declared and paid a dividend of $50,000 to Pedro. There were no temporary differences between Pedro's pre-tax financial income of $620,000 and taxable income from its own operations for the year ended December 31, 2006. Pedro's income tax rate is 40%.
Prepare a journal entry for Pedro Corporation on December 31, 2006, to provide for income taxes for 2006, including taxes applicable to Pedro's equity-method income from Sanchez. (Pedro is entitled to a dividend received deduction of 80% in its income tax returns.)

Pedro Corporation Organized a 75%-Owned Subsidiary, Sanchez Company, on January