Compute the balance in the investment account

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Reference no: EM13753180

Use the following information from Blue-Cross Inc 2014 annual report to calculate the dividend yield on common stock and the payout ratios. Then comment on the results.

2014 2013 2012

Earnings per share $1.22 $1.53 $1.90

Dividends per share 1.29 1.52 1.48

Stock price per common $20.31 $37.63 $44.19

Question

Safeway Company acquired 75 percent of the outstanding voting common stock of Giant Company for $1,444,800 cash on January 1, 2011. The investment is accounted for under the equity method. During 2011, 2012, and 2013, Giant Company reported the following:

Year Net income/(loss) Dividends Paid

2011 $357,840 $290,640

2012 ($45,360) -0-

2013 $108,360 $72,240

Prepare general journal entries to record the investment and the effect of the subsidiary’s income, losses, and dividends on Safeway Company’s accounts

Compute the balance in the investment account as of December 31, 2013.

Reference no: EM13753180

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