Equity Method Investment with Intercompany SalesThe Coca-Cola Company owns 28 percent of the voting stock of Coca-Cola FEMSA, acquired at book value. Assume that CocaCola FEMSA MBCHomeworkLO 1MBCHomeworkLO 1MBCHomeworkLO 1MBCHomeworkLO 2Chapter 1Intercorporate Investments: An Overview23

reports income of $5 million for 2019. CocaCola FEMSA regularly sells canned beverages to CocaCola at a markup of 35 percent on cost. During 2019 CocaCola FEMSA's sales to CocaCola totaled $25 million. CocaCola's January 1, 2019, inventories include $1,350,000 purchased from CocaCola FEMSA. CocaCola's December 31, 2019, inventories include $1,215,000 purchased from CocaCola FEMSA.

prepare 2019 journal entries on coca-cola's book to recognize its income from coca-cola's FEMSA under the ewuity method