On January 1, 2017, Rickson Corporation purchased 7,500 shares of AutoTech as a long-term investment for a total of $235,000. The 7,500 shares represent 30% of the outstanding (25,000) shares of AutoTech. Prepare the journal entries for Rickson to record the following transactions and events: December 31, 2017:AutoTech reported net income of $66,000 for 2014.February 1, 2018:Sold 1,875 of the AutoTech shares for $34 per share. In addition, ?$1,350 in fees and commissions were paid by Rickson on this sale.November 1, 2018:Rickson received a $0.90 per share cash dividend from AutoTech.December 31, 2018:AutoTech reported net loss of $46,000 for 2015.
What will be an ideal response?
| 12/31/17 | Equity Method Investments | 19,800 | ? |
| ? | Earnings from Equity Method Investment | ? | 19,800 |
| ? | ($66,000 * 30% = $19,800) | ? | ? |
| ? | ? | ? | ? |
| 2/01/18 | Cash [(1,875 * $34) ? $1,350] | 62,400 | ? |
| ? | Loss on Sale of Equity Method Investment | 1,300 | ? |
| ? | Equity Method Investments | ? | 63,700 |
| ? | Carrying value of stock: ($235,000 + $19,800) * 1,875/7,500 = $63,700 | ? | ? |
| ? | Loss on sale = $63,700 ? $62,400 = $1,300 | ? | ? |
| ? | ? | ? | ? |
| 11/01/18 | Cash | 5,062.50 | ? |
| ? | Equity Method Investment | ? | 5,062.50 |
| ? | [(7,500 ? 1,875) * $0.90] | ? | ? |
| ? | ? | ? | ? |
| 12/31/18 | Loss from Equity Method Investment | 10,350 | ? |
| ? | Equity Method Investment | ? | 10,350 |
| ? | $46,000 * [(7,500 ? 1,875)/25,000] | ? | ? |
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