Answer:
See explanation section
Explanation:
Rowan Co.
Journal Entries
1. July 1 Investment - JBI Corp. Debit $580,000
Cash Credit $580,000
(As Rowan purchases JBI co. share as an investment, an asset (Investment) increases and another asset (Cash).
2. November 1 Cash Debit $4,400
Dividend on Investment - JBI Corp. Credit $4,400
(As JBI co. received dividend, Rowan co. received cash for investing in JBI co.'s 40%)
Calculation: $11,000 × 40% = $4,400.
3. December 31 Investment - JBI Co. Debit $88,000
Share of Net Income - JBI Co. Credit $88,000
(As Rowan Co. purchases JBI company' s share, they will receive the share of net income of JBI co.)
Calculation: $220,000 × 40% = $88,000
