Entries for Equity investment 20-50% ownership (please help!)

Show Me How Entries for equity investments: 20%-50% ownership At a total cost of $1,872,000, Herrera Corporation acquired 160,000 shares of Tran Corp. common stock as a long-term investment. Tran Corp. has 400,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. a. Journalize the entries by Herrera Corporation to record the following information: If an amount box does not require an entry, leave it blank. 1. Tran Corp. reports net income of $3,370,000 for the current period. Investment in Tran Corp. Stock Income of Tran Corp. 2. A cash dividend of $1.40 per common share is paid by Tran Corp. during the current period. Cash Investment in Tran Corp. Stock b. Why is the equity method appropriate for the Tran Corp. investment? An investment amount between 20% and 50% of the outstanding common stock of the investee is presumed to represent significant influence. The equity method is appropriate when the investor can exercise significant influence over the investee. 8:41