Orlov Corporation purchased 8,000 shares of Matsey Corporation common stock for $40 per share on January 1,2009.Matsey reported net income of $120,000 for 2009 and paid dividends of $42,000 during 2009.As of December 31,2009,the market value of Matsey Corporation common stock was $40 per share.Assuming the shares owned by Orlov represent 10 percent of the total outstanding stock of Matsey,the entry to record the receipt of dividend income in Orlov Corporation's books is:

Question

Quizplus · Accepted Answer

Orlov Corporation owns 10% of Matsey Corporation, so it receives 10% of the dividends paid. Matsey paid $42,000 in dividends, so Orlov receives $4,200 (10% of $42,000).

Orlov Corporation Purchased 8,000 Shares of Matsey Corporation Common Stock Cash 8,000 Dividend Income8,000\begin{array}{llr} \text { Cash } &8,000\\ \text { Dividend Income} &&8,000\\\end{array} Cash Dividend Income​8,000​8,000​

Orlov Corporation Purchased 8,000 Shares of Matsey Corporation Common Stock $\begin{array}{llr} \text { Cash } &8,000\\ \text { Dividend Income} &&8,000\\\end{array}$