Journal entries to apply the equity method of accounting for investments in securities.

The following information summarizes data about the minority, active investments of Stebbins Corporation.

Stebbins Corporation amortizes any excess acquisition cost over 20 years.

a. Give the journal entries to record the acquisition of these investments and to apply the equity method during Year 1 and Year 2.

b. Stebbins Corporation sells Security S on January 1, Year 3, for $330,000. Give the journal entry to record the sale.

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Book Value of Earnings (Loss) Security Date Acquired Acquisition Cost Ownership Percentage Net Assets on January 1, Year 1 Year 1 Year 2 Year 1 R 1/1/Year 1 $250,000 25% $800.000 $200,000 $225,000 $125,000 S 1/1/Year 1 325,000 40 750.000 120,000 75.000 80,000 Dividends Year 2 $130,000 80,000 T 1/1/Year 1 475,000 50 950.000 (150,000) 50.000