On January 1, 2022, Coastal Corp.purchased 30% of the common shares of Mansbridge Corp.for $600,000.During 2022, Mansbridge Corp.reported net income of $75,000 and paid total cash dividends of $15,000.The balance in the Investment in Associates (Mansbridge) account on Coastal's books at December 31, 2022 is
A)$675,000.
B)$622,500.
C)$618,000.
D)$600,000.

Question

Quizplus · Accepted Answer

Coastal Corp.'s share of Mansbridge Corp.'s net income for 2022 is 30% of $75,000, which equals $22,500. This amount is added to the initial investment of $600,000. Coastal's share of dividends paid by Mansbridge, which is 30% of $15,000, equals $4,500. This amount is subtracted from the investment account. Therefore, the balance in the Investment in Associates (Mansbridge) account at the end of 2022 is $600,000 + $22,500 - $4,500 = $618,000.