At the Beginning of 2013, Zylon Ltd $\begin{array}{|c|c|}\hline \text { DR Investment in Hendrick } & 12,000 \\\hline \text { CR Investment income } & 12,000\\\hline \end{array}$

question 22

Multiple Choice

At the beginning of 2013, Zylon Ltd. acquired 15% of the voting shares of Hendrick Co. a public company for $150,000. Zylon does not have any significant influence over Hendrick.. In 2013, Hendrick earned net income of $70,000 and paid dividends of $40,000. The fair value of the 15% at the end of 2013 was $160,000. In 2014, Hendrick earned net income of $80,000 and paid dividends of $100,000. The fair value of the 15% at the end of 2014 was $157,000. At the end of 2014, what journal entry should Zylon make regarding its investment in Hendrick Co. in net income?

• A)
• \(\begin{array}{|c|c|}
• \hline \text { DR Investment in Hendrick } & 12,000 \\
• \hline \text { CR Investment income } & 12,000\\\hline
• \end{array}\)
• B)
• \(\begin{array} { | c | c |c| }
• \hline \text { DR Investment in Hendrick } & 80,000 \\
• \hline \text { CR Investment income } && 80,000 \\
• \hline
• \end{array}\)
• C)No entry is required
• D)
• \(\begin{array} { | c | c | }
• \hline \text { DR Investment in Hendrick } & 15,000 \\
• \hline \text { CR Investment income } &15,000 \\
• \hline
• \end{array}\)

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