Recording Entries for Equity Investment: Equity Method On January 1, 2020, Mercedez Company purchased 640 of the 1,600 outstanding shares of Auto Supplies Inc. for $32,000. At that date, the balance sheet of Auto Supplies Inc. showed the following values. Assets not subject to depreciation $64,000 + Assets subject to depreciation Liabilities 41,600** 9,600 * Common stock (par $1) Retained earnings 80,000 16,000 * Same as fair value. ** Fair value $48,000; the assets have a 10-year remaining useful life (straight-line depreciation). a. Provide the entry by Mercedez Company to record the acquisition at a cost of $64,000. Date Jan. 1, 2020 Account Name Dr. Cr. 0 0 0 Dr. Cr. 0 0 b. Assume that on December 31, 2020 (end of the accounting period), Auto Supplies Inc. reported net income of $19,200. Provide all year-end entries for Mercedez Company. Account Name Date Dec. 31, 2020 0 0 To record proportionate share of investee's net income Dec. 31, 2020 0 0 0 0 To adjust for depreciation c. In February 2021, Auto Supplies Inc. declared and paid a $2 per share cash dividend. Provide the necessary entry for Mercedez Company. Date Feb. 2021 Account Name = Dr. Cr. 0 0 0 0 Cash Interest Receivable Investment in TS Fair Value Adjustment-TS Investment in AFS Securities Fair Value Adjustment-AFS Investment in HTM Securities Investment in Stock Fair Value Adjustment--Equity Securities Fair Value Adjustment-Fair Value Option Allowance for Credit Losses Accumulated Other Comprehensive Income Unrealized Gain or LossOCI Unrealized Gain or Loss-Income Dividend Revenue Interest Revenue Investment Income Loss on Impairment Recovery of Loss on Impairment Loss on Sale of Investment Loss on Sale of Investment Gain on Sale of Investment N/A