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9 June, 17:48

On January 1, 2018, Bangle Company purchased 30% of the voting common stock of Sleat Corp. for $1,000,000. Any excess of cost over book value was assigned to goodwill. During 2018, Sleat paid dividends of $24,000 and reported a net loss of $140,000. What is the balance in the investment account on December 31, 2018?

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  1. 9 June, 18:32
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    The balance in the investment account on December 31, 2018 is $950,800

    Explanation:

    The computation of the balance in the investment account is shown below:

    = Common stock value - net loss - dividend amount

    where,

    Common stock is $1,000,000

    Net loss = Net loss * percentage rate

    = $140,000 * 30%

    = $42,000

    And, the dividend equals to

    = dividend * percentage rate

    = $24,000 * 30%

    = $7,200

    Now put these values to the above formula

    So, the answer would be equal to

    = $1,000,000 - $42,000 - $7,200

    = $950,800
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