Presented below are the balance sheets of Blanco,Inc.and Stalle Company at January 1,2X13: $\begin{array}{l}
\begin{array} { l }
&&\text { Dental Works} & &\text { Stalle Company}\
&&\text { Balance Sheet} & &\text { Balance Sheet}\
&&\text { january 1, 2X13} & &\text { january $ 1,2 \times 13 $}\
\end{array}\

\begin{array} { l }
\text { Cash } & \$ 35 \
\text { Net Fixed Assets } &265\
\text { Total Assets } & \$ 300\

\end{array}
\begin{array} { l }
\text { Cash } & \$250 \
\text { Net Fixed Assets } & \underline{450} \
\text { Total Assets } & \$ 700 \

\end{array}
\end{array}$
$\begin{array}{llll}
\text { Accounts Payable } & \$ 30 & \text { Accounts Payable } & \$ 90 \
\text { Long-term Bonds Pay. } & 100 & \text { Long-term Bonds Pay. } & 200 \
\text { Stockholders' Equity } & \underline{170} & \text { Equity } & \underline{410} \
\text { Total Liab. \& Equity } & \$ 300 & \text { Total Liab. \& Equity } & \$ 700 \

\end{array}$ On January 1,2X13,Stalle Company acquired 70% of the outstanding common stock of Blanco,Inc.,for $119 in cash.Assume the book value of Blanco's assets and liabilities equals the market value.
If Blanco,Inc.,generated net income during 2X13 of $10,and none of the income was the result of intercompany sales,what journal entry would Stalle Company make to reflect this event?

Question

Presented below are the balance sheets of Blanco,Inc.and Stalle Company at January 1,2X13: $\begin{array}{l}
\begin{array} { l } 
&&\text { Dental Works}  & &\text {   Stalle Company}\
&&\text { Balance Sheet}  &  &\text { Balance Sheet}\
&&\text { january 1, 2X13} & &\text {  january \( 1,2 \times 13 $}\
\end{array}\

\begin{array} { l } 
\text { Cash } & \$ 35 \
\text { Net Fixed Assets } &265\
\text { Total Assets } & \$ 300\

\end{array}
\begin{array} { l } 
\text { Cash } & \$250 \
\text { Net Fixed Assets } & \underline{450} \
\text { Total Assets } & \$ 700 \

\end{array}
\end{array}\)
 $\begin{array}{llll}
\text { Accounts Payable } & \$ 30 & \text { Accounts Payable } & \$ 90 \
\text { Long-term Bonds Pay. } & 100 & \text { Long-term Bonds Pay. } & 200 \
\text { Stockholders' Equity } & \underline{170} & \text { Equity } & \underline{410} \
 \text { Total Liab. \& Equity } & \$ 300 & \text { Total Liab. \& Equity } & \$ 700 \

\end{array}$ On January 1,2X13,Stalle Company acquired 70% of the outstanding common stock of Blanco,Inc.,for $119 in cash.Assume the book value of Blanco's assets and liabilities equals the market value.
If Blanco,Inc.,generated net income during 2X13 of $10,and none of the income was the result of intercompany sales,what journal entry would Stalle Company make to reflect this event?

Quizplus · Accepted Answer

Stalle Company owns 70% of Blanco, Inc., so it recognizes 70% of Blanco's net income as investment revenue. 70% of $10 is $7, which is recorded as investment revenue.

Presented Below Are the Balance Sheets of Blanco,Inc On January 1,2X13,Stalle Company Acquired 70% of the Outstanding Common