On January 1, Year 7, Pepper Company purchased 6,000 of the 20,000 outstanding shares of Spice Companys voting common stock for $25 a share. Spruce reports a net income of $450,000 for year 7. Spice declares $75,000 of dividends in year 7. The market value of Spice Company common stock is $28 a share on December 31, year 7.

Below is a list of account names to choose from to answer the journal entry questions below.

Cash	Dividends Receivable
Common Stock	Investment in Pepper
Dividend Revenue	Investment in Spice
Dividend Declared	Investment Revenue
Dividends Payable	None

The level of influence that Pepper Company has over Spice Company is:

A. None

B. Insignificant

C. Significant

D. Controlling

Make the 1/1/Y7 journal entry on Peppers books to record the investment in Spice.

Account	Debit	Credit
		----------
	----------

Make the Year 7 journal entry needed on Peppers books when Spice declares dividends.

Account	Debit	Credit
		----------
	----------

Make the Year 7 journal entry needed on Peppers books when Spice reports Net Income.

Account	Debit	Credit
		----------
	----------

Make the 12/31/Y7 journal entry needed on peppers books to recognize the change in the value of Spice Company shares.

Account	Debit	Credit