Please answer the following 2 questions!!

Question 1)

Eaton Company owns 10,000 shares (10% of total shares) of James, Inc. James declares and pays a cash dividend of $0.25 per share. Eaton first records dividends when cash is received. Upon receipt of the cash dividend, what entry should Eaton make?

Select one:

A.

Cash

2,500

Stock InvestmentJames

2,500

B.

Dividends Receivable

2,500

Dividend Income

2,500

C.

Cash

2,500

Dividend Income

2,500

D.

Cash

2,500

Dividends Receivable

2,500

E. None of the above

Question 2)

Under the equity method, which of the following does not cause a decrease in the investment account?

Select one:

A. The losses of the investee

B. Dividends paid by the investee

C. Declines in the fair value of the investment

D. All of the choices would decrease the investment account