Accounting for equity investments; $20\%-50\%$ ownership

Lynch Corporation owns $35\%$ of the outstanding common stock of Katherine Interiors Inc.

a$.$ Explain how Lynch Corporation would account for its share of Katherine Interiors' net income of $$500,000.$

Lynch Corporation would record its $ $q,$ share of Katherine Interiors Inc.$\text{'}$s net income as a$($n$)$ to its investment account, Investment in Katherine Interiors Stock, and $a(n)$ to Income of Katherine Interiors Inc.

b$.$ Explain how Lynch Corporation would account for the receipt of $$30,000$ of dividends from Katherine Interiors Inc.

Lynch Corporation would record the receipt of $ as $a(n)$ to the investment account and $a(n)$ to Cash.