During review of the adjusting entries to be recorded on December 31, 20X8, Grand Corporation discovered that it had inappropriately been using the cost method in accounting for its investment in Case Products Corporation. Grand purchased 100 percent ownership of Case Products on January 1, 20X6, for $56,000, at which time Case Products reported retained earnings of $14,000 and capital stock outstanding of $27,000. The differential was attributable to patents with a life of eight years. Income and dividends of Case Products were:

Year Net Income Dividends

20X6 $24,000 $8,000

20X7 32,000 10,000

20X8 40,000 10,000

Required:

Prepare the correcting entry required on December 31, 20X8, to properly report the investment under the equity method, assuming the books have not been closed. Case Products' dividends were declared in early November and paid in early December each year.

Record the correcting entry. 20X8