Question 6: Investment in Equity

Kalvin Co. acquired 15% of the 5,000,000 shares of common stock of Tops Co. at a cost of

$8.50 per share on January 1, 2017. Tops Co. declared and paid a $250,000 cash dividend and reported net income of $685,000 for the year.

On January 2, 2018, Kalvin sold these shares at a market price of $9.00 per share.

Required:

Prepare all necessary journal entries for 2017 and 2018.