At the Beginning of 20X1, Anwar Ltd $$\begin{array} { | c | c | } \hline \text { DR Investment in Cruz } & 12,000 \\\hline \text { CR Investment income } & 12,000 \\\hline\end{array}$$

question 24

Multiple Choice

At the beginning of 20X1, Anwar Ltd. acquired 15% of the voting shares of Cruz Co. for $150,000. Anwar does not have any significant influence over Cruz. Anwar reports the investment using the cost method. In 20X1, Cruz earned net income of $70,000 and paid dividends of $40,000. In 20X2, Cruz earned net income of $80,000 and paid dividends of $100,000. At the end of 20X2, what journal entry should Anwar make to record its share of Cruz's net income?

• A) \[\begin{array} { | c | c | }
• \hline \text { DR Investment in Cruz } & 12,000 \\
• \hline \text { CR Investment income } & 12,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | c | }
• \hline \text { DR Investment in Cruz } & 18,000 \\
• \hline \text { CR Investment income } & 18,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | c | }
• \hline \text { DR Investment in Cruz } & 80,000 \\
• \hline \text { CR Investment income } & 80,000 \\
• \hline
• \end{array}\]
• D)No entry is required

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