Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik

Exercise 11

On January 1, 2011, Ruark Corporation acquired a 40 percent interest in Batson, Inc., for $210,000.On that date, Batson's balance sheet disclosed net assets of $360,000.During 2011, Batson reported net income of $80,000 and paid cash dividends of $25,000.Ruark sold inventory costing $30,000 to Batson during 2011 for $40,000.Batson used all of this merchandise in its operations during 2011.Prepare all of Ruark's 2011 journal entries to apply the equity method to this investment.