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On January 1 , 2 0 2 2 , Winnie Corporation purchased 2 0 % ( 5 , 0 0 0 shares ) of the

On January 1,2022, Winnie Corporation purchased 20%(5,000 shares) of the outstanding stock
of Naomi Corporation for $100,000. At the end of 2022, Naomi Corporations stock had a fair
market value of $24 per share and at the end of 2023, the stock had a fair market value of $22 per
share.
During 2023, Naomi Corporation paid dividends of $3.00 per share and earned $60,000 in net
income.
a. Prepare the journal entries that Winnie would make during 2023 assuming that
they do NOT have significant influence over Naomi as a result of their stock
ownership (i.e. fair value method).
b. Prepare the journal entries that Winnie would make during 2023 assuming that
they do have significant influence over Naomi as a result of their stock ownership
(i.e. equity method).

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