On January 1, Payton Incorporated acquired 32% of the outstanding voting shares of Mannin Company at a cost of $ 2,196,000 by acquiring 72,000 of the total 225,000 outstanding shares at a cost of $ 30.50 per share. During the year, Mannin reported $ 1,238,000 in net income and declared and paid $ 1.15 per share dividends. At the time of acquisition, the book value of ­M annin’s net assets equaled its market value.
Required
a. Prepare the journal entry required to record the acquisition of the investment in Mannin Company.
b. Prepare the journal entry required to record Payton’s share of the investee’s net income.
c. P repare the journal entry required to record the receipt of the cash dividends.
d. What is the carrying value of Payton’s investment in Mannin Company at the end of the year?