On March 31, 2021, Chow Brothers, Inc., bought 8% of KT Manufacturings capital stock for $51.5 million. KTs net income for the year ended December 31, 2021, was $80.5 million. The fair value of the shares held by Chow was $36.0 million at December 31, 2021. KT did not declare or pay a dividend during 2021.

Required:
1. Prepare all appropriate journal entries related to the investment during 2021.
2. Assume that Chow sold the stock on January 20, 2022, for $30.5 million. Prepare the journal entries to record the sale.

Required 1: Journal Entires:

1: Record the purchase of KT Manufacturing's capital stock for 51.5 million.

2: Record the entry for KT's net income.

3: Record the fair-value adjustment.

Required 2: Journal Entires

Assume that Chow sold the stock on January 20, 2022, for $30.5 million. Prepare the journal entries to record the sale.

1: record the entry to adjust fair value.

2: Record the sale of stock on January 20,2022 for 30.5 million.