Problemon january 4 2013 watts co purchased 40000 shares 40, Ask an Expert

Accounting

Problem:

On January 4, 2013, Watts Co. purchased 40,000 shares (40%) of the common stock of Adams Corp., paying $800,000. There was no goodwill or other cost allocation associated with the investment. Watts has significant influence over Adams. During 2013, Adams reported income of $200,000 and paid dividends of $80,000. On January 2, 2014, Watts sold 5,000 shares for $125,000.

Required:

Question: What was the balance in the investment account after the shares had been sold?

$848,000.
$742,000.
$723,000.
$761,000.
$925,000.

Note: Please show how you came up with the solution.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91165745

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