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27 November, 04:44

Winston Corporation owns 25% of the voting stock of Tole Corporation and uses the equity method in recording the investment. Tole Corporation reported a $50,000 net loss. Winston Corporation's entry would include a

a. debit to the investment account for $50,000.

b. debit to the cash account for $12,500.

c. debit to the investment account for $12,500.

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Answers (1)
  1. 27 November, 05:17
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    c. debit to the investment account for $12,500.

    Explanation:

    The computation is shown below:

    = Net loss reported * owning percentage

    = $50,000 * 25%

    = $12,500

    Simply we multiplied the reported net loss and its owning percentage so that the accurate loss amount can come

    Since it is a net loss, so it would be debited to the investment account for $12,500

    Hence, all other options are wrong except option c.
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Home » Business » Winston Corporation owns 25% of the voting stock of Tole Corporation and uses the equity method in recording the investment. Tole Corporation reported a $50,000 net loss. Winston Corporation's entry would include a a.
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