A. Zoop Corporation purchased for $323,200 a 26% interest in Murphy, Inc. This investment enables Zoop to exert significant influence over Murphy. During the year, Murphy earned net income of $186,500 and paid dividends of $69,200. Prepare Zoop’s journal entries related to this investment.
B. On January 1, 2014, Zoop Corporation purchased 30% of the common shares of Edwards Company for $248,000. During the year, Edwards earned net income of $99,200 and paid dividends of $24,800.Prepare the entries for Zoop to record the purchase and any additional entries related to this investment in Edwards Company in 2014.
C. Zoop Corporation purchased trading investment bonds for $59,420 at par. At December 31, Zoop received annual interest of $2,240, and the fair value of the bonds was $56,610.Prepare Zoops journal entries for (a) the purchase of the investment, (b) the interest received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.)