SR Company acquired 40 percent of the voting common shares of DKM, Inc., on January 1, 2001, for $120,000 cash. Income reported and cash dividends declared and paid by DKM in 2001 and 2002 were as follows:$\begin{array} { | l | l | l | }
\hline & \text { Income } & \text { Dividends } \
\hline 2001 & \$ 20,000 & \$ 12,000 \
\hline 2002 & ( 5,000 ) & - 0 \text { - } \
\hline
\end{array}$
Give all of the 2001 and 2002 entries other than the acquisition, as they would appear in the accounts of SR. Assume that significant influence exists.
2001 entries:
2002 entries:

Question

SR Company acquired 40 percent of the voting common shares of DKM, Inc., on January 1, 2001, for $120,000 cash. Income reported and cash dividends declared and paid by DKM in 2001 and 2002 were as follows:$\begin{array} { | l | l | l | } 
\hline & \text { Income } & \text { Dividends } \
\hline 2001 & \$ 20,000 & \$ 12,000 \
\hline 2002 & ( 5,000 ) & - 0 \text { - } \
\hline
\end{array}$
Give all of the 2001 and 2002 entries other than the acquisition, as they would appear in the accounts of SR. Assume that significant influence exists.
2001 entries:
2002 entries:

Quizplus · Accepted Answer

The Answer of SR Company acquired 40 percent of the voting common shares of DKM, Inc., on January 1, 2001, for $120,000 cash. Income reported and cash dividends declared and paid by DKM in 2001 and 2002 were as follows:$\begin{array} { | l | l | l | } 
\hline & \text { Income } & \text { Dividends } \
\hline 2001 & \$ 20,000 & \$ 12,000 \
\hline 2002 & ( 5,000 ) & - 0 \text { - } \
\hline
\end{array}$
Give all of the 2001 and 2002 entries other than the acquisition, as they would appear in the accounts of SR. Assume that significant influence exists.
2001 entries:
2002 entries:

SR Company Acquired 40 Percent of the Voting Common Shares