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2017 Jan 1 Investor Corporation purchased 8,000 shares (20%) of Investae Company's outstanding stock at a cost of $150,000. May 31 Investee Company declared and
2017 Jan 1 Investor Corporation purchased 8,000 shares (20%) of Investae Company's outstanding stock at a cost of $150,000. May 31 Investee Company declared and paid a cash dividend of $1.50 per share. Dec 31 Investee Company announced that its net income for the year was $100,000 2018 Oct 1 Investee Company declared and paid a cash dividend of $1.00 per share. Dec 31 Investee Company announced that its net income for the year was $80,000 2019 Jan 1 Investor Corporation sold all of its shares of Investee Company for $178,000 cash. Required: 1. Prepare journal entries on Investor Corporation's books using the cost method, which assumes that even though Investor owns 20% of Investee's stock, Investor does not have significant influence over Investee (for example, another corporation owns 70% of Investee Company's stock)
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