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Homework:practice exam 2

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Part 1On January 1, Jefferson Company acquired 25 %25% of the outstanding voting shares of Tremont Corporation at a cost of $ 1,340,000$1,340,000 by acquiring 20,00020,000 of the total 80,00080,000 outstanding shares at a cost of $ 67$67 per share. During the year, Tremont reported $ 875,000$875,000 in net income and declared and paid $ 3.75$3.75 per share dividends. At acquisition, Tremont'sTremont's market value equaled the book value of its net assets. Prepare the journal entries required to record the above events assuming that Jefferson uses the equity method to account for its investment in Tremont. Part 1Begin by recording the journal entry for investment. Do not record the entry for share of net income and total dividends declared. We will do that in the next steps. (Record debits first, then credits. Exclude explanations from any journal entries.) [table] | Save Accounting Table... | | + | Copy to Clipboard... | | + [/table] [table] Account | Entry at Acquisition Investment in Tremont Corporation | 1,340,000 | Cash | | 1,340,000 | | | | [/table]Part 2Next, prepare the journal entry to reflect Jefferson's share of Tremont's net income. Do not record the entry for total dividends declared and paid. We will do that in the next step. [table] | Save Accounting Table... | | + | Copy to Clipboard... | | + [/table] [table] Account | Entry at Year-end Investment in Tremont Corporation | 218,750 | Income from Investment | | 218,750 | | | | [/table]Part 3Now, prepare the journal entry to reflect Jefferson's share of Tremont's dividends declared and paid. [table] | Save Accounting Table... | | + | Copy to Clipboard... | | + [/table] [table] Account | Entry at Year-end | | | | | | | | [/table] Save Accounting Table...+Copy to Clipboard...+AccountEntry at Acquisition[Account][Fill in the blank][Fill in the blank][Account][Fill in the blank][Fill in the blank][Account][Fill in the blank][Fill in the blank][Account][Fill in the blank][Fill in the blank] [IMPORTANT INSTRUCTION] When returning answers, provide an array for [Fill in the blank] positions ONLY. Skip [Account] cells (these are dropdowns). If a [Fill in the blank] should be empty, return an empty string "" as a placeholder. The array length should equal the number of [Fill in the blank] cells, not total cells.

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The task asks to prepare journal entries for an equity-method investment in Tremont, with several parts. First, restating the key figures for clarity: - Jefferson acquires 25% of Tremont’s outstanding shares, 20,000 of 80,000 shares, at a total cost of 1,340,000. - Tremont reports net income of 875,000 for the year. - Tremont declares and pays dividends of 3.75 per share on 80,000 shares, for a total of 3.75 × 80,000 = 300,000. - Under the equity method, the investor increases its Investment account by its share of net income and decreases it by its share of dividends. Part 1: Journal entry at acquisition - The instruction asks to record the investment entry only, debiting Investment in Tremont Corporation and crediting......Login to view full explanation

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