On January 9, Pruett Company acquired 40% of the outstanding stock of Tolley Company for $130,000. For the year ending December 31, Tolley Company earned income of $60,000 and paid dividends of $20,000.

Instructions: Using the equity method, prepare the entries for Pruett Company for the purchase of the stock, share of Tolley income, and dividends received from Tolley Company.

JOURNAL

DATE DESCRIPTION DEBIT CREDIT