DFM Services acquired (30 %) of the outstanding common stock of BNA Company on January 1, 1998,

Question:

DFM Services acquired $30 \%$ of the outstanding common stock of BNA Company on January 1, 1998, by paying $\$ 800,000$ for the 40,000 shares. BNA declared and paid $\$ .20$ per share cash dividends on March 15, June 15, September 15, and December 15,1998 . BNA reported net income of $\$ 350,000$ for the year.

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(a) Prepare the journal entries for DFM Services for 1998 assuming DFM cannot exercise significant influence over BNA. (Use the cost method.)

(b) Prepare the journal entries for DFM Services for 1998 assuming DFM can exercise significant influence over BNA. (Use the equity method.)

(c) In tabular form indicate the investment and income statement account balances at December 31, 1998, under each method of accounting.

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