Nadal Corporation purchased 10,000 shares of Cutler Inc.'s common stock, on January 1, 2019, for $100,000. During 2019, Cutler declared and paid cash dividends to Nadal in the amount of $8,000. Nadal's share of Cutler's net income for 2019 was $12,400. At December 31, 2019, the fair value of 10,000 shares of Cutler's common stock was $120,000. This is Nadal's only investment.
Required:
1. Assume that Cutler has 75,000 shares of common stock outstanding. What journal entries will Nadal make during 2019 relative to this investment?
2. Assume that Cutler has 40,000 shares of common stock outstanding. What journal entries will Nadal make during 2019 relative to this investment?