AE17-13 (Equity Method)
Gator Co. invested $1,120,000 in Demo Co. for 25% of its outstanding stock. Demo Co. pays out 40% of net income in dividends each year.
Use the information in the following T-account for the investment in Demo to answer the following questions.
Investment in Demo Co.
(a) How much was Gator Co.'s share of Demo Co.'s net income for the year?
(b) How much was Gator Co.'s share of Demo Co.'s dividends for the year?
(c) What was Demo Co.'s total net income for the year?
(d) What was Demo Co.'s total dividends for the year?
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Your tutorial shows you the journal entries that would impact the investment account and the rule. The computations are in excel for you.