E2-3 Journal entries for investment under cost method On March 2, Klaus AG acquired 500 of Max AG’s 10,000 outstanding shares with a par value of $10 for $10,000 in cash. Klaus AG didn’t have any significant influence on Max AG in this transaction. On April 1, Max AG declared and paid dividends of $500,000. Klaus AG reported income of $1,000,000 at the end of the period.

REQuIRED: Prepare the necessary journal entries in Klaus AG’s book from the above information.