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The investor owns 40% ownership in the investee. Suppose the investee sells merchandise costing $40,000 to the investor for $60,000, and at years end, the
The investor owns 40% ownership in the investee. Suppose the investee sells merchandise costing $40,000 to the investor for $60,000, and at years end, the investor still retains $15,000 of the goods. The investee reports a net income of $120,000 for the year. The investor uses the equity method.
Prepare journal entries for the investor at the end of the year.
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