Equity Method for Stock Investment At a total cost of $915,200, Herrera Corporation acquired 64,000 shares of Tran Corp. common stock as a long-term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 200,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. a. Journalize the entries by Herrera Corporation to record the following information: 1. Tran Corp. reports net income of $1,650,000 for the current period. Investment in Tran Corp. Stock Income of Tran Corp. Feedback Check My Work a. 1. Calculate the ownership percentage by dividing the acquired shares by the total Tran Corp. shares outstanding. Increase both the investment and income accounts by the ownership percentage times Tran Corp.'s net income. 2. A cash dividend of $1.20 per common share is paid by Tran Corp. during the current period. Cash V Investment in Tran Corp. Stock Cash Investment in Tran Corp. Stock Feedback Check My Work a. 2. Reduce the investment and increase cash by the number of shares acquired times dividends paid per share. b. Why is the equity method appropriate for the Tran Corp. investment? An Investment amount between 20% and 50%