Brown Corporation earns $600,000 and pays cash dividends of $200,000 during 2012. Dexter Corporation owns 3,000 of the 10,000 outstanding shares of Brown. What amount should Dexter show in the investment account at December 31, 2012 if the beginning of the year balance in the account was $800,000? Question 18 options: $980,000. $800,000. $920,000. $1,200,000.

Question

Business

Emilio Benton

28 December, 08:59

Brown Corporation earns $600,000 and pays cash dividends of $200,000 during 2012. Dexter Corporation owns 3,000 of the 10,000 outstanding shares of Brown. What amount should Dexter show in the investment account at December 31, 2012 if the beginning of the year balance in the account was $800,000? Question 18 options: $980,000. $800,000. $920,000. $1,200,000.

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Answers (1)

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Yaretzi Willis · Answer 1

Answer: $920,000

Explanation:

Given the following:

Beginning balance = $800,000

Brown's earning = $600,000

Casg Dividend = $200,000

Dexter's portion of brown's outstanding shares = 3000 / 10000 = 0.3

Therefore, Dexter's investment account is as follows:

Beginning balance + (earning * 0.3) - (Dividend * 0.3)

$800,000 + ($600,000 * 0.3) - ($200,000 * 0.3)

$800,000 + $180,000 - $60,000

$980000 - $60000 = 920000