Compute the balance in equity investment

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On January 2, 2020, Thoreau Corp. purchased 25,000 shares (25%) of the common stock of Browning & Company. The purchase price was $250,000. Thoreau has significant influence over Browning. No amortization is required. During 2020, Browning reported income of $150,000 and paid dividends of $40,000. On January 2, 2021, Thoreau sold 10,000 shares for $127,500.

1. Compute the balance in Equity Investment at December 31, 2020.

2. Prepare the journal entry to record the sale of the 10,000 shares.

3. What was the balance in Equity Investment after the shares were sold?

Reference no: EM133222977

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