On March 31, 2018, Chow Brothers, Inc., bought 10% of KT Manufacturing's capital stock for $50 million. KTs net income for the year ended December 31, 2018, was $80 million. The fair value of the shares held by Chow was $35 million at December 31, 2018. KT did not declare or pay a dividend during 2018.

Required:

1.- Prepare all appropriate journal entries related to the investment during 2018.

2.- Assume that Chow sold the stock on January 20, 2019 for $30 million. Prepare the journal entries to record the sale.

Complete this question by entering your answers in the below.

Required 1 Required 2

Prepare all appropriate journal entries related to the investment during 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions, (i.e., 10,000,000 should be entered as 10).)

Journal entry worksheet

1

Record the purchase of KT manufacturing's capital stock for $50 million.

2

Record the entry for KT's net income

3

Record any necessary entry to adjust the fair value on December 31, 2018