Bank Corp. owns 80% of Shore Corp.’s outstanding capital stock. Shore’s capital stock consists of 50,000 shares of common stock issued and outstanding. Shore’s 2007 net income was $140,000. During 2007, Shore declared and paid dividends of $60,000. In conformity with generally accepted accounting principles, Bank recorded the following entries in 2007:
|
Debit |
Credit |
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|
Investment in Shore Corp. common stock |
$112,000 |
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|
Equity in earnings of subsidiary |
$112,000 |
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|
Cash |
48,000 |
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|
Investment in Shore Corp. common stock |
48,000 |
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In its 2007 consolidated tax return, Bank should report dividend revenue of
- $48,000
- $14,400
- $ 9,600
- $0