On March 31, 2018, Chow Brothers, Inc., bought 5% of KT Manufacturings capital stock for $55.7 million. KTs net income for the year ended December 31, 2018, was $81.9 million. The fair value of the shares held by Chow was $38.8 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.

- Record the purchase of KT Manufacturings capital stock for $55.7 million.

2. Assume that Chow sold the stock on January 20, 2019 for $31.9 million. Prepare the journal entries to record the sale.

- Record the entry for KT's net income.

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

4. Record any necessary entry to adjust the fair value on the date of sale.

5. Record the sale of stock on January 20, 2019 for $31.9 million.