On January 1, 2017, Trevor bought 6% of Joseph Company's common stock for $20,000. During 2017, Joseph earned $6,000 of net income and distributed $4,400 of dividends. On January 1, 2018, Trevor bought an additional 35% of Joseph Company's common stock. The fair value of the Joseph shares owned by Trevor was $21,000 on December 31, 2017. The acquisition of the additional 35% of Joseph at the beginning of 2018 gave Trevor significant influence.
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Required:
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Prepare the appropriate entries for Trevor on January 1, 2018, as a result of the additional acquisition and change in ownership classification.
What will be an ideal response?
| Investment in Stock: Dan Company | 96 | ? | |
| Retained Earnings [0.06ยด($6,000-$4,400)] | ? | 96 | |
| ? | ? | ? | |
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