Answer:<em> </em><em>Please refer to Explanation</em>
Explanation:
A.
January 1 20X9
DR Investment in Thinbill Company $380,000
CR Cash $380,000
<em>(To record Investment in Thinbill Company)</em>
DR Investment in Thinbill Company $18,000
CR Income from Thinbill Company $18,000
<em>(To record income from Thinbill company)</em>
DR Investment in Thinbill Company $8,000
CR Unrealised gain on Investment $8,000
<em>(To record share of OCI reported by Thinbill Company)</em>
DR Cash $3,600
CR Dividend $3,600
<em>(To record dividend received from Thinbill Company)</em>
<u>Workings</u>
Income from Thinbill Comapny
Callas owns 40% of Thinbill company and so is entitled to 40% of income which is,
= 40% x 45,000
= $18,000
Dividends
= 9,000 x 40%
= $3,600
Unrealised Gain on Income
= 20,000 x 40%
= $8,000
<em>b. The closing entries are as follows,</em>
DR Income from Thinbill Company $18,000
CR Retained Earnings $18,000
<em>(To recognise income from Thinbill Company)</em>
DR Unrealised Gain on Investment $8,000
CR Accumulated OCI Income from Investee (Thinbill Company) $8,000
<em>(To record accumulated OCI income)</em>
