Entries for equity investments: 20%50% ownership

On January 6, 20Y8, Bulldog Co. purchased 34% of the outstanding common stock of $170,000. Gator Co. paid total dividends of $20,400 to all shareholders on June 30, 20Y8. Gator had a net loss of $34,000 for 20Y8.

a. Journalize Bulldog's purchase of the stock, receipt of the dividends, and the adjusting entry for the equity loss in Gator Co. stock.

Jan. 6 - Purchase		fill in the blank 7a559afbc03bfea_2	fill in the blank 7a559afbc03bfea_3
		fill in the blank 7a559afbc03bfea_5	fill in the blank 7a559afbc03bfea_6
June 30 - Dividend		fill in the blank 7a559afbc03bfea_8	fill in the blank 7a559afbc03bfea_9
		fill in the blank 7a559afbc03bfea_11	fill in the blank 7a559afbc03bfea_12
Dec. 31 - Equity Loss		fill in the blank 7a559afbc03bfea_14	fill in the blank 7a559afbc03bfea_15
		fill in the blank 7a559afbc03bfea_17	fill in the blank 7a559afbc03bfea_18

b. Compute the balance of Investment in Gator Co. Stock on December 31, 20Y8. $fill in the blank b7c5d6fe3038fe3_1

c. How does valuing an investment under the equity method differ from valuing an investment at fair value?

Under the method, the investor will record their proportionate share of the net increase (or decrease) of the book value of the investee resulting from earnings and dividend distributions. The method uses market price information to value the investment in the investee.