On January 4, 20Y6, Spandella Company purchased 175,000 shares of Filington Company directly from one of the founders for a price of $30 per share. Filington has 500,000 shares outstanding, including the Spandella shares. On July 2, 20Y6, Filington paid $620,000 in total dividends to its shareholders. On December 31, 20Y6, Filington reported a net income of $1,050,000 for the year. Spandella uses the equity method in accounting for its investment in Filing ton.
a. Journalize the Spandella Inc. entries for the transactions involving its investment in Filing ton Company during 20Y6.
b. Determine the December 31, 20Y6, balance of the investment in Filington Company stock account.