Fredo, Inc., purchased $10\%$ of Sonny Enterprises for $$1,000,000$ on January $1,2021.$ Sonny recognized a total of $$310,000$ net income during $2021,$ paid $$21,000$ of dividends to Fredo during $2021,$ and at December $31,2021,$ the market value of the Sonny investment increased to $$1,031,000.$

Required:

Prepare the journal entries necessary to account for the Sonny investment, assuming that Fredo $(1)$ does not have significant influence or $(2)$ does have significant influence over the operating and financial policies of the investee.

Complete this question by entering your answers in the tabs below.

Prepare the journal entries necessary to account for the Sonny investment, assuming that Fredo lacks significant influence. $($If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.$)$

Journal entry worksheet

$1$

$2$

$3$

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Record the entry for investment in Sonny Enterprises.

Note: Enter debits before credits.

$\backslash$table$[[$Transaction$,$General Journal,Debit,Credit$],[1,,,],[,,,],[,,,],[,,,],[,,,],[,,,]]$

$84F$

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