ABC Corporation acquired a 35% interest in XYZ Company on January 1, 2018, for $750,000. At that time, XYZ had 1,000,000 shares of its $1 par common stock issued and outstanding. During 2018, XYZ paid cash dividends of $240,000 and thereafter declared and issued a 5% common stock dividend when the fair value was $2 per share. XYZ's net income for 2018 was $540,000.

Using the attached T-account template, prepare all necessary entries for ABC Corporations equity method investment.