Reference no: EM132937862
Question - Jetson Company decided to purchase a significant long-term investment in Elroy Company. Elroy has 500,000 shares authorized and 110,000 shares issued. Jetson intends to hold significant influence over Elroy through this investmentOn January 1, 2020, Elroy Company issues shares to Jetson Company as follows:
Shares issued 58,000
Cash paid to Elroy 2,320,000$
Additional information:
-On September 15, 2020, Elroy Company declares and pays a total cash dividend of $150,000.
-Elroy Company reports $206,000 net income for its year ended December 31, 2020. Its stock price on December 31, 2020 is $42.
-On October 22, 2021, Elroy declares and pays a total cash dividend of $125,000.
-Elroy Company reports $246,000 net income for the year ended December 31, 2021. Its stock price on December 31, 2021 is $45.
-On July 1, 2022, Jetson Company sold all their shares in Elroy for $50 per share. Elroy earned net income of $105,000 for the first six months of 2022
Required -
a) Calculate the percentage of ownership Jetson has in Elroy Company.
b) Prepare all required journal entries in Jetson's books for the 2020, 2021, and 2022 years.
On July 1, 2022, Jetson Company sold all their shares in Elroy for $50 per share. Elroy earned net income of $105,000 for the first six months of 2022.
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