Please help:
Young Co acquired a 60% interest in Tomlin Corp. on December 31, 2003 for $630,000. During 2004, Tomlin had net income of $400,000 and paid cash dividends of $100,000. At December 31, 2004, the balance in the investment account should be:
a. $630,000
b. $870,000
c. $930,000
d. $810,000

I think it is C but not sure:

Quote:

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Originally Posted by surveyor

Please help:
Young Co acquired a 60% interest in Tomlin Corp. on December 31, 2003 for $630,000. During 2004, Tomlin had net income of $400,000 and paid cash dividends of $100,000. At December 31, 2004, the balance in the investment account should be:
a. $630,000
b. $870,000
c. $930,000
d. $810,000

I think it is C but not sure:

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investment account
630,000
60% of net income: 400, 000 * .60 = 240000

60% of dividends : 100,000 * .60 = (60,000)
You subtract the dividends because hey are equity investors. Dividends decreases the investment.


630,000 + 240,000 - 60,000 = 810,000

I believe it is D.