On january 1, puckett company paid $2.97 million for 99,000 shares of harrison’s voting common stock, which represents a 40 percent investment. no allocation to goodwill or other specific account was made. significant influence over harrison is achieved by this acquisition and so puckett applies the equity method. harrison distributed a dividend of $3 per share during the year and reported net income of $580,000. what is the balance in the investment in harrison account found in puckett’s financial records as of december 31?

Balance of Harrison's Investment in Puckett's Financial Records

= $2,905,000

Explanation:

To calculate the balance of Harrison's account in Puckett's financial records the following steps are applied.

Step 1: Calculate the percentage of reported Income that accruees to Harrsion in Puckett

=Reported Net Profit x Percent Investement of Harrison in Puckett

= $580,000 x 0.40= $232,000

Step 2: Calculate the Dividend Accrued to Harrison's Common Stok basd on the $3 dividend per share declared

= Total Number of Shares for Harrison x $3

=99,000 Shares x $3= $297,000

Final Step: Calcuate the balance of Harrision's Investment in Puckett

= Amount paid for 99,000 stock + Percentage of Reported Income Accrued to Harrison- Harrison's portion of Dividend declared

= $2,970,000 + $232,000- $297,000

= $2,905,000

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