Use the following information to solve the following questions:
The summarized balance sheets of Thunder Bay Corp. and Fort William Corp. at December 31, 2020, are as follows:

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THUNDER BAY CORP.

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Balance Sheet

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December 31, 2020

\begin{array}{llcc} \text {Assets. } &\underline{\$400,000} \\ \text {Liabilities. } &\$50,000\\ \text { Common shares } &200,000\\ \text { Retained earnings } &\underline{150,000}\\ \text { Total equities } &\underline{\$400,000}\\\end{array}

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FORT WILLIAM CORP.

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Balance Sheet

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December 31, 2020

\begin{array}{llcc} \text { Assets } & \underline{\$300,000} \\\end{array}

\begin{array}{c}\text {FORT WILLIAM CORP.}\\\text {Balance Sheet}\\\text {December 31,2020}\\\begin{array}{lll} \text { Assets.}\\ \text { Liabilities}\\ \text { Common shares.}\\ \text { Retained earnings.}\\ \text { Total equities.}\end{array}\begin{array}{l}\underline{\$ 300,000}\\\$ 75,000 \\185,000 \\\underline{40,000} \\\underline{\$ 300,000 }\\\end{array}\end{array}

-If Thunder Bay acquired a 20% interest in Fort William on December 31, 2020, for $ 45,000, and during 2021 Fort William reported net income of $ 25,000 and paid a total cash dividend of $ 10,000, applying the equity method would give a debit balance in the Investment in Fort William Corp. account at the end of 2021 of
A) $ 37,000.
B) $ 45,000.
C) $ 48,000.
D) $ 50,000.

Assuming the Revised Amount and Timing of Cash Flows for an Investment

Multiple Choice

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