During review of the adjusting entries to be recorded on December 31, 20X8, Grand Corporation discovered...

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Accounting

During review of the adjusting entries to be recorded onDecember 31, 20X8, Grand Corporation discovered that it hadinappropriately been using the cost method in accounting for itsinvestment in Case Products Corporation. Grand purchased 100percent ownership of Case Products on January 1, 20X6, for $58,000,at which time Case Products reported retained earnings of $11,000and capital stock outstanding of $29,000. The differential wasattributable to patents with a life of eight years. Income anddividends of Case Products were:
Year Net Income Dividends
20X6 $ 19,000 $ 7,000
20X7 27,000 9,000
20X8 35,000 9,000
Required:
Prepare the correcting entry required on December 31, 20X8, toproperly report the investment under the equity method, assumingthe books have not been closed. Case Products' dividends weredeclared in early November and paid in early December each year.(If no entry is required for a transaction/event, select "Nojournal entry required" in the first account field.)

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Date General Journal Debit Credit 20X8 investment in case products stock 42500 Dividend income 9000 Income from case products 42500900021000 balancing figure 30500 See Answer

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During review of the adjusting entries to be recorded onDecember 31, 20X8, Grand Corporation discovered that it hadinappropriately been using the cost method in accounting for itsinvestment in Case Products Corporation. Grand purchased 100percent ownership of Case Products on January 1, 20X6, for $58,000,at which time Case Products reported retained earnings of $11,000and capital stock outstanding of $29,000. The differential wasattributable to patents with a life of eight years. Income anddividends of Case Products were:YearNet IncomeDividends20X6$19,000$7,00020X727,0009,00020X835,0009,000Required:Prepare the correcting entry required on December 31, 20X8, toproperly report the investment under the equity method, assumingthe books have not been closed. Case Products' dividends weredeclared in early November and paid in early December each year.(If no entry is required for a transaction/event, select "Nojournal entry required" in the first account field.)

Year	Net Income			Dividends
20X6		$	19,000		$	7,000
20X7			27,000			9,000
20X8			35,000			9,000