Hamasaki Company owns 30% of CDW Corp.stock and has significant influence.Hamasaki received $6,500 in cash dividends from its investment in CDW.The entry to record receipt of these dividends includes a debit to Cash for $6,500 and a credit to Equity Method Investments for $6,500.

Question

Quizplus · Accepted Answer

This is correct. When a company receives cash dividends from an investment in which it has significant influence (ownership of 20-50% of the voting stock), the entry to record the receipt of those dividends includes a debit to Cash and a credit to Equity Method Investments.

Hamasaki Company Owns 30% of CDW Corp