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Calculating Investment

Patton Corporation owns 2,500 of the 10,000 outstanding shares of Forman Corporation. During 2013, Forman Corporation earns $1,500,000 and pays cash dividends of $120,000. What amount should Patton show in the investment account on December 31, 2013 if the beginning of the year balance in the account was $1,000,000?

a. $1,000,000
b. $1,345,000
c. $1,375,000
d. $1,405,000

Solution Summary

This solution calculates the investment account for Patton Corporation, assuming the beginning balance was $1,000,000.