#5

Pawn Corporation purchased 30 percent of Shop Company's common stock on January 1, 20x5, by issulng preferred stock with a par value of $50,000 and a market price of $120,000. The following amounts relate to Shop's balance sheet items at that date: Shop purchased bulldings and equipment on January 1, 20x0, with an expected economic life of 20 years. No change in overall expected economic life occurred as a result of the acquisition of Pawn's stock. The amount pald in excess of the fair value of Shop's reported net assets is attributed to unrecorded copyrights with a remaining useful life of elght years. During 205, Shop reported net income of $40,000 and paid dividends of $10,000. Required: Prepare all journal entries to be recorded on Pawn Corporation's books during 205, assuming it uses the equity method in accounting for its ownership of Shop Company. Note: If no entry is required for a transaction/event, select "No journal entry required" In the flrst account fleld