P8-1) Stock Dividend, Subsidiary stock sales, equity method
On January 1, 2015, Wells Corporation acquires 8,000 shares of Towne Company stock and 18,000 shares of Sara Company Stock for $176,000 and $240,000, respectively. Each investment is acquired at a price equal to the subsidiary's book value, resulting in no excesses. Town Company and Sara company have the following stockholder's equitites immediately prior to Wells' purchase:
	Towne Company	Sara Company
Common Stock ($5 par)	$50,000
Common Stock ($10 par)		$300,000
PIC Excess of Par	$100,000
Retained Earnings	$70,000	$100,000
Total Stockholders Equity	$220,000	$400,000
a) Net income for Towne Company and Sara company for 2015 and 2016 follows (income is assumed to bee earned evenly throughout the year)	2015	2016
Towne Company	$50,000	$50,000
Sara Company	$40,000	$40,000
b) No cash dividends are paid or declared by Towne or Sara during 2015 and 2016
c) Towne Company distributes a 10% stock dividend on December 31, 2015. Towne stock is selling at $25 per share when the stock dividend is declared.
d) On July 1, 2016, Towne company sells 2,750 shares of stock at $35 per share. Wells corporation purchases none of these shares
e) Sara company sells 5,000 shares of stock on Jjuly 1, 2015 at $25 per share. Wells corporation purcahses 3,700 of these shares
f) On January 1, 2016, Sara company purchases 5,000 shares of its common stock from NCI at $20 per share.
Assume wells corporation uses the simple equity method for its investments in subsidiaries. For 2015 and 2016, record each of the adjustments to the investment accounts. Provide all supporting calculations in good form.