On January 2, Froxel Company purchased 10,000 shares of Sandia Corp. common stock at $19 per share plus a $3,000 commission. This represents 30% of Sandia Corp.'s outstanding stock. On August 6, Sandia Corp. declared and paid cash dividends of $1.75 per share, and on December 31 it reported net income of $150,000. Prepare the necessary entries for Froxel to account for these transactions and events.
What will be an ideal response?
| ? | ? | ? | |
| Jan 2 | Equity Method Investments | 193,000 | ? |
| ? | Cash [(10,000 * $19) + $3,000] | ? | 193,000 |
| Aug 6 | Cash [10,000 * $1.75] | 17,500 | ? |
| ? | Equity Method Investments | ? | 17,500 |
| Dec 31 | Equity Method Investments | 45,000 | ? |
| ? | Earnings from Equity Method Investments ($150,000 * 30%) | ? | 45,000 |
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