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's outstanding stock, so Orlov is entitled to 10% of Matsey's dividends. Matsey paid dividends of $42,000 during 2009, so Orlov's share of the dividends is $4,200 (10% x $42,000).

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