On January 1, 2018, West Coast Boats paid $ 1,850,000 for its 30% investment in East Coast Autos. After the purchase, West Coast Boats has significant influence over East Coast Autos. East Coast Autos earned net income of $30,000,000 and paid cash dividends of $15,000,000 to all outstanding stockholders during 2018. Assume all outstanding stock is voting stock.
Requirement:
1. Journalize all required 2018 transactions related to West Coast Boats' investment in East Coast Autos. Omit explanations.
2. What is the December 31, 2018 balance of the investment account? Label your work.
2. Equity Investments - East Coast Autos
Beginning balance - 1/1/18 -0-
Add Purchase of stock $1,850,000
Revenues from Investments 9,000,000
Less: Dividends (4,500,000)
Ending balance - 12/31/18 $6,350,000
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