On January 1, 20X8, William Company Acquired 30 Percent of EGate

question 33

Multiple Choice

On January 1, 20X8, William Company acquired 30 percent of eGate Company's common stock, at underlying book value of $100,000. eGate has 100,000 shares of $2 par value, 5 percent cumulative preferred stock outstanding. No dividends are in arrears. eGate reported net income of $150,000 for 20X8 and paid total dividends of $72,000. William uses the equity method to account for this investment.
-Based on the preceding information,what amount would William Company receive as dividends from eGate for the year?

• A) $62,000
• B) $21,600
• C) $18,600
• D) $54,000

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Definitions:

Automatic Transfer

A banking service that automatically moves funds from one account to another at scheduled times or under specific conditions.

Adjusted Cash Balance

The cash amount shown on a company's books after adjustments have been made for checks outstanding, deposits in transit, and other discrepancies.

Check Register

A record kept by an individual or institution to track checks written, deposits made, and the current balance of a checking account.

Bank Statement

A document issued by a bank detailing transactions, balances, and other financial information for a specific account over a period.