Investment under the equity method

Assignment Help Managerial Accounting

Reference no: EM13918390

During review of the adjusting entries to be recorded on December 31, 20X8, Grand Corporation discovered that it had inappropriately been using the cost method in accounting for its investment in Case Products Corporation. Grand purchased 100 percent ownership of Case Products on January 1, 20X6, for $59,000, at which time Case Products reported retained earnings of $15,000 and capital stock outstanding of $27,000. The differential was attributable to patents with a life of eight years. Income and dividends of Case Products were:

Year	Net Income			Dividends
20X6		$	18,000		$	10,000
20X7			26,000			12,000
20X8			34,000			12,000

Required:

Prepare the correcting entry required on December 31, 20X8, to properly report the investment under the equity method, assuming the books have not been closed. Case Products' dividends were declared in early November and paid in early December each year.

I need help to figure out the income from case products and retained earnings. the journal enrty looks like this and should balance out.

investment in case products 37625

dividends income 12,000

income from case products xxxxx

retained earnings xxxxx

Reference no: EM13918390

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