Marley Services acquired 25% of the outstanding common stock of Stevens Company Prepare entries under the com on January 1, 2006, by paying $800,000 for the 40,000 shares. Stevens declared and paid $0.30 and equity methods, and tabupet share cash dividends on March 15, June 15, September 15, and December 15, 2006. Stevens '"''' differences.

reported net income of $320,000 for the year. At December 31, 2006, the market price of (SO 3)

Stevens common stock was $24 per share.

Instructions

(a) Prepare the journal entries for Marley Services for 2006 assuming Marley cannot exercise significant influence over Stevens. (Use the cost method and assume that Stevens' common stock should be classified as a trading security.)

(b) Prepare the journal entries for Marley Services for 2006, assuming Marley can exercise significant influence over Stevens. Use the equity method.

(c) In tabular form, indicate the investment and income statement account balances at December 31, 2006, under each method of accounting.