Alpha Corporation owns 75 percent of X-Rays common stock, which was purchased at book value. During the year, X-Ray reports net income of $40,000, while Alpha reports earnings of $150,000 from its own operations and $30,000 of investment income. Alpha pays dividends during the year of $50,000, and X-Ray pays dividends of $20,000. On January 1, Alpha has a retained earnings balance of $500,000 while X-Ray has retained earnings of $300,000.Alpha accounts for its investment in X-Ray using the equity method. 14. Consolidated net income for the year is: A. $180,000 B. $150,000 C. $40,000 D. $30,000 E. None of the above. 15. Consolidated retained earnings as of the end of the year is: A. $950,000 B. $800,000 C. $630,000 D. $320,000 E. None of the above.
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