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Accounting for equity investments; $20\%-50\%$ ownership

Lynch Corporation owns $35\%$ of the outstanding common stock of Katherine Interiors Inc.

a$.$ Explain how Lynch Corporation would account for its share of Katherine Interiors' net income of $$500,000.$

Lynch Corporation would record its $

share of Katherine Interiors Inc.$\text{'}$s net income as a$($n$)$

to its investment account, Investment in Katherine Interiors Stock, and a$($n$)$

to Income of Katherine Interiors Inc.

b$.$ Explain how Lynch Corporation would account for the receipt of $$30,000$ of dividends from Katherine Interiors Inc.

Lynch Corporation would record the receipt of $

as $a(n)$

to the investment account

and $a(n)$

to Cash. Accounting for equity investments; $20\%-50\%$ ownership

Lynch Corporation owns $35\%$ of the outstanding common stock of Katherine Interiors Inc.

a$.$ Explain how Lynch Corporation would account for its share of Katherine Interiors' net income of $$500,000.$

Lynch Corporation would record its $

share of Katherine Interiors Inc.$\text{'}$s net income as a$($n$)$

to its investment account, Investment in Katherine Interiors Stock, and a$($n$)$

to Income of Katherine Interiors Inc.

b$.$ Explain how Lynch Corporation would account for the receipt of $$30,000$ of dividends from Katherine Interiors Inc.

Lynch Corporation would record the receipt of $

as $a(n)$

to the investment account

and $a(n)$

to Cash.

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