P2-2 Journal entries for a step-by-step acquisition (cost and equity methods)

On January 1, 2016, Jang Corporation paid $200,000 in cash for a 10 percent interest in Sheon Corporation when the book value of Sheon’s net assets equaled fair value. One year later, on January 1, 2017, Jang decided to purchase an additional 70 percent interest in Sheon for $1,000,000 in cash when the book value of Sheon’s net assets still equaled fair value. Sheon Corporation’s common stock and retained earnings were $1,500,000 and $500,000, respectively, on December 31, 2015. It declared dividends of

$25,000 on March 1 and $25,000 on September 1 in both 2016 and 2017. Its net income was $100,000 in 2016 and $150,000 in 2017.

REQuIRED: Assuming that it is now 2018, prepare all the journal entries (other than closing entries) on the books of Jang Corporation during 2016 and 2017 to account for the investment in Sheon.