1) Record the following transactions for Rich Inc.

a) As a long term investment, Rich Inc. acquires 40,000 shares of Norris Inc. common stock at a cost of $600,000. Rich Inc. uses the equity method of accounting for this investment because it represents 25% of the voting stock of Norris Inc.

b) On May 18, a cash dividend of $.75 per share is paid by Noorris Inc.

c) Norris Inc.reports net income of $900,000 for the year.

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DATE DESCRIPTION DEBIT CREDIT

2)) Record the following transactions for Smith Inc.

a) As a long term investment, Smith Inc. acquires 10,000 shares of Norris Inc. common stock at a cost of $150,000. Rich Inc. uses the cost method of accounting for this investment because it represents 5% of the voting stock of Norris Inc.

b) On Sep 3, a cash dividend of $.50 per share is paid by Norris Inc.

c) Norris Inc.reports net income of $350,000 for the year.

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DATE DESCRIPTION DEBIT CREDIT