Basics of Equity Equity Method

Prepare the journal entries for the following transactions for Batson Co.

(a) Batson Co. purchased 1,200 shares of Michael Corp. stock for $20.75 per share plus a $70 commission. Michael Corp stock has 5000 total shares outstanding including Batsons 1200 shares. Journalize the purchase of the stock.

(b) Michael Corp net income for the year is $184,000. Record any necessary year end journal entry.

(c) Michael Corp paid a total of $40,000 in cash dividends. Record the receipt of dividends.