Revco Corporation purchases 40% of the common stock Ron Corporation on 1/1/16 for $15,000,000 in cash. Ron Corporation pays dividends on 12/1/16 of $250,000 and reports net inome for 2016 of $900,000.

Required

1.) Prepare the journal entries on Revco's books to report the above information assuming Revco accounts for its investment in Ron Corporation using the Equity Method.

2.) At what amount would Revco report its investments in Ron Company on its 12/31/16 Balance Sheet?