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Phillips Company bought 40 percent ownership in Jones Bag Company on January 1, 20X1, at underlying book value.

Phillips Company bought 40 percent ownership in Jones Bag Company on January 1, 20X1, at underlying book value. In 20X1, 20X2, and 20X3, Jones Bag reported net income of $8,000, $12,000, and $20,000, and dividends of $15,000, $10,000, and $10,000, respectively. The balance in Phillips Company’s investment account on December 31, 20X3, was $54,000.

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