Option #1: Equity Method of Accounting On 1/1/xx, Company A purchases 100% of Company B for $100,000 cash. On 12/31/xx, Company B realizes profit of $20,000 and pays dividends of $5,000. Using the...

Option #1:Equity Method of Accounting

On 1/1/xx, Company A purchases 100% of Company B for $100,000 cash. On 12/31/xx, Company B realizes profit of $20,000 and pays dividends of $5,000.

Using the Excel spreadsheet you are to:

1. Prepare all required entries for Company A associated with the above activities utilizing the equity method.


2. Determine the balance in Company A's investment account at the end of the year. Highlight the 12/31/xx balance in yellow.

Submission Requirements:

• Clearly identify the requirements being addressed.


• Show all calculations within the cells of an Excel spreadsheet. This means that you must use formulas and links so that the thought process can be examined. Populating a result, without showing the supporting calculation, will not be sufficient.


• Make good use of comments to convey your thought process as well.


• No hard coding of solutions.


• Submit a single MS Excel file for grading.