Problem:
On January 3, 2013, Roberts Company purchased 30% of the 100,000 shares of common stock of Thomas Corporation, paying $1,500,000. There was no goodwill or other cost allocation associated with the investment. Roberts has significant influence over Thomas. During 2013, Thomas reported income of $300,000 and paid dividends of $100,000. On January 4, 2014, Roberts sold 15,000 shares for $800,000.
Required:
Question: What is the balance in the investment account after the sale of the 15,000 shares?
- $750,000.
- $760,000.
- $780,000.
- $790,000.
- $800,000.
Note: Provide support for your rationale.