On January 1 of the current year, PurchaseAgent.com acquired 40 percent (1,500,000 shares) of the common stock of E-Transaction Corporation. The accounting period for both companies ends December 31.

On January 1 of the current year, PurchaseAgent.com acquired 40 percent (1,500,000 shares) of the common stock of E-Transaction Corporation. The accounting period for both companies ends December 31.

July 2 E-Transaction declared and paid a cash dividend of $5 per share.

Dec. 31 E-Transaction reported net income of $410,000.

Prepare the journal entries for each of the following transactions that occurred during the current year for PurchaseAgent.com.

Explanation:

July 2:

(1,500,000 shares × $5 = $7,500,000); 40% ownership

Dec. 31:

(40% × $410,000) = $164,000