What is the Equity in Maya Income that should be reported by Cayman in 2019?

Question

Quizplus · Accepted Answer

The Equity in Maya Income that should be reported by Cayman in 2019 is the sum of Maya's income that has not been distributed as dividends or transferred to reserves. In 2018, Maya's net income was $20,000 and $6,000 were distributed as dividends, leaving $14,000. In 2019, Maya's net income was $28,000, but $10,000 were transferred to reserves, leaving $18,000. Therefore, the total Equity in Maya Income that should be reported by Cayman in 2019 is $14,000 + $18,000 = $32,000. However, in 2018, Cayman had already reported $2,500 of this equity, so the additional amount that should be reported in 2019 is $32,000 - $2,500 = $29,500. Adding the $5,000 of equity that Cayman already held at the beginning of the year, the total Equity in Maya Income that should be reported by Cayman in 2019 is $29,500 + $5,000 = $34,500. Therefore, the correct answer is C.

What Is the Equity in Maya Income That Should Be