Sky Corporation engaged in several transactions involving a long-term investment in Lift Corporation.The equity method is used to account for this investment because Sky exercises significant influence over Lift.
a_On Jan 1,Sky Corporation purchased 3,000 common shares of Lift Corporation
$\text { for } \$ 12 \text { per share. This represents } 20 \% \text { ownership of Lift Corporation. }$ b_On March 31,Lift Corporation pays a $1.75 per share dividend to all common shareholders.
c_On December 31,the market price of Lift Corporation shares is $12.50 per share.
d_On December 31,Lift Corporation reported net income of $80,000.
Prepare journal entries for the above transactions.

Question

Sky Corporation engaged in several transactions involving a long-term investment in Lift Corporation.The equity method is used to account for this investment because Sky exercises significant influence over Lift.
a_On Jan 1,Sky Corporation purchased 3,000 common shares of Lift Corporation
 $\text { for } \$ 12 \text { per share. This represents } 20 \% \text { ownership of Lift Corporation. }$ b_On March 31,Lift Corporation pays a $1.75 per share dividend to all common shareholders.
c_On December 31,the market price of Lift Corporation shares is $12.50 per share.
d_On December 31,Lift Corporation reported net income of $80,000.
Prepare journal entries for the above transactions.

Quizplus · Accepted Answer

The Answer of Sky Corporation engaged in several transactions involving a long-term investment in Lift Corporation.The equity method is used to account for this investment because Sky exercises significant influence over Lift.
a_On Jan 1,Sky Corporation purchased 3,000 common shares of Lift Corporation
 $\text { for } \$ 12 \text { per share. This represents } 20 \% \text { ownership of Lift Corporation. }$ b_On March 31,Lift Corporation pays a $1.75 per share dividend to all common shareholders.
c_On December 31,the market price of Lift Corporation shares is $12.50 per share.
d_On December 31,Lift Corporation reported net income of $80,000.
Prepare journal entries for the above transactions.