Draft Co. purchased 14,000 shares of Hamburg Corporation's 40,000 shares of common stock on January 1. This represented 35% of Hamburg's outstanding shares and gave Draft Co. significant influence over Hamburg's management and operations. On October 11, Hamburg declared and paid cash dividends of $30,000. On December 31, Hamburg reported net income of $125,000 for the year. Prepare the journal entries Draft Co. should record to account for the dividends received and the earnings reported by Hamburg Corporation.
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| Oct 11 | Cash [$30,000 * 35%] | 10,500 | ? |
| ? | Equity Method Investments | ? | 10,500 |
| Dec 31 | Equity Method Investments ($125,000 * 35%) | 43,750 | ? |
| ? | Earnings From Equity Method Investments | ? | 43,750 |
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