D-7

Equity Method for Stock Investment On January 4, 2016, Spandella Company purchased 112,000 shares of Filington Company directly from one of the founders for a price of $64 per share. Filington has 400,000 shares outstanding, including the Spandella shares. On July 2, 2016, Filington paid $274,000 in total dividends to its shareholders. On December 31, 2016, Filington reported a net income of $1,007,000 for the year. Spandella uses the equity method in accounting for its investment in Filington. a. Journalize the Spandella Inc. entries for the transactions involving its investment in Filington Company during 2046. 20Y6 Jan, 4 2016 July 2 2016 Dec. 31 b. Determine the December 31, 2016, balance of the investment in Fillington Company stock account