Exercise 12-25 (Algorithmic) Fair Value and Equity Methods Nadal Corporation purchased 10,100 common shares of Beck Inc., on January 1, 2018, for $90,000. During 2018, Beck declared and paid cash dividends to Nadal in the amount of $9,000. Nadal's share of Beck's net income for 2018 was $11,800. At December 31, 2018, the fair value of the 10,000 shares was $125,000. This is Nadal's only investment. Required: 1. Assume that Beck has 75,750 common shares outstanding. What journal entries will Nadal make during 2018 relative to this investment? Investments-Beck Inc 90,000 2018, Jan. 1 Cash 90,000 (Record purchase of Beck shares) Cash 9,000 2018, Jan. 1 Dividend Income v 9,000 (Record receipt of dividend) 2018, Dec. 31 Investments-Beck Inc. 15.000 Unrealized Gain (Loss) on fair value 15,000 X (Record adjustment to fair value) 2. Assume that Beck has 40,400 common shares outstanding. What journal entries will Nadal make during 2018 relative to this investment? Investments-Equity Method 90,000 2018, Jan. 1 Cash 90,000 (Record purchase of Beck shares) Cash 9,000 2018, Jan. 1 Investments-Equity Method 9,000 (Record receipt of dividend) 2018, Dec. 31 Investments-Equity Method 9,000 X Investment Income-Equity Method 505,000 X (Record Nadal's share of Beck's net income)