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14 May, 19:43

g On January 2, Yorkshire Company acquired 34% of the outstanding stock of Fain Company for $400,000. For the year ended December 31, Fain Company earned income of $104,000 and paid dividends of $32,000. Prepare the entries for Yorkshire Company for the purchase of the stock, the share of Fain income, and the dividends received from Fain Company.

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  1. 14 May, 20:50
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    See the explanation below:

    Explanation:

    Share of profit of Fain Company = $104,000 * 34% = $35,350

    Dividend received = $32,000 * 34% = $10,880

    Date Details Dr ($) Cr ($)

    Jan. 2 Investment in Fain Company 400,000

    Cash 400,000

    To record payment for investment in Fain Company

    Dec. 31 Investment in Fain Company 35,350

    Share of profit of Fain Co. 35,000

    To record share of profit in Fain Company

    Dec. 31 Cash 10,880

    Investment in Fain Company 10,880

    To record received from investment in Fain Company
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