ABC, Inc. acquired a 40% interest in XYZ, Inc. in January 2021, for $250,000, giving ABC significant influence over XYZ. Any excess of purchase price over book value was considered goodwill. In 2021, XYZ reported net income of $100,000 and paid total dividends amounting to $20,000. Prepare ABCs 2021 journal entries related to its investment in XYZ. Be sure you label your answers separately for A. and B.

A: Prepare the journal entry to record the investors share of investees reported income.

B: Prepare the Journal entry to record the investors share of dividends paid by the investee.