Which of the Following Journal Entries Would Have to Be

question 28

Multiple Choice

Which of the following journal entries would have to be made to record X's share of Y's net income for 2016?

• A)
• \[\begin{array} { | l | l | l | }
• \hline & \text { Debit } & \text { Credit } \\
• \hline \text { Investment in } Y & \$ 12,500 & \\
• \hline \text { Equity method inc ome } & & \$ 12,500 \\
• \hline
• \end{array}\]
• B)
• \[\begin{array} { | l | l | l | }
• \hline & \text { Debit } & \text { Credit } \\
• \hline \text { Investment in } Y & \$ 7,500 & \\
• \hline \text { Equity method inc ome } & & \$ 7,500 \\
• \hline
• \end{array}\]
• C)
• \[\begin{array} { | l | l | l | }
• \hline & \text { Debit } & \text { Credit } \\
• \hline \text { Investment in } Y & \$ 12,000 & \\
• \hline \text { Equity method inc ome } & & \$ 12,000 \\
• \hline
• \end{array}\]
• D)No entry requireD.Share of net income = $50,000 x 25% = $12,500.

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