RBO Company purchased 25 of the voting common stock of YJD ...

[dollx]

RBO Company purchased 25 of the voting common stock of YJD Company on January 1 and paid 800,000 for the investment. YJD Company reported 50,000 of earnings for the year and paid 10,000 in cash dividends.
 
  Calculate investment income and the balance sheet investment account balance for RBO Company using the following methods:
 
  a, Cost method.
  b, Equity method.
 
 
 What will be an ideal response?

Question 2

When do you run the Post-Closing Trial Balance report?
 a. Before adjustments are made
   b. Before financial statements are run
   c. After closing entries are posted
   d. None of the above

[Joc]

Answer to Question 1

Investment Income Investment Account

(a) Cost method 2,500  800,000

(b) Equity method 12,500  810,000

 10,000 cash dividends x 25
 50,000 earnings x 25
 800,000 + 12,500 - 2,500

Answer to Question 2

c