Parris Corporation purchased 40% of Samitz Corporation for $100,000 on January 1.On November 17 of the same year,Samitz Corporation declared total cash dividends of $12,000.At year-end,Samitz Corporation reported net income of $60,000.The balance in the Parris Corporation's Long-Term Investment in Samitz Corporation at December 31 should be:
A)$80,800
B)$100,000
C)$95,200
D)$119,200
E)$124,000

Question

Quizplus · Accepted Answer

Parris Corporation's investment in Samitz Corporation should be adjusted for its share of Samitz's net income and dividends. The initial investment is $100,000. Parris's share of Samitz's net income is 40% of $60,000, which is $24,000. Parris's share of the dividends is 40% of $12,000, which is $4,800. The balance is calculated as $100,000 + $24,000 - $4,800 = $119,200.

Parris Corporation Purchased 40% of Samitz Corporation for $100,000 on January