Assume that Horicon Corp acquired 25% of the common stock of Sheboygan Corp. on January 1 for $300,000. During the year Sheboygan Corp. reported net income of $160,000 and paid total dividends of $60,000. What entry would Horicon make to record the receipt of the dividend from Sheboygan?
A. Debit Cash and credit Revenue from Investment in Sheboygan Corp.
B. Debit Dividends and redit Revenue from Investment in Sheboygan Corp.
C. Debit Cash and credit Stock Investments
D. Debit Cash and credit Dividend Revenue.

Option C. Debit Cash and credit Stock Investments

Explanation:

The reason is that in the equity method of recording the dividends receipts, it is always deducted from the stock investment and the relevant share of reported net income of the associate is added to the stock investment.

So mathematically,

Stock Investment Under Equity Method = Opening Value for the year + Share of Net Income - Dividend received

Stock Investment Under Equity Method = $300,000 + $160,000 * 25% + $60,000 * 25% = $325,000

The above treatment shows that the recording of dividends include credit to stock investment and the cash receipt is always debited.

So the double entry would be:

Dr Cash $15,000

Cr Dividends $15,000

So the option C is correct.

a recipe serves 8 people, and calls for 5 lbs of apples and 2 cups of flour. you want to prepare it for 24 people. divide 24 by 8 to get 3, and then multiply your ingredients by 3.

so for 24 people, you'll need 15 lbs of apples, and 6 cups of flour.