Recording Entries for Equity Investment: Equity Method On January 1, 2020, Allen Corporation purchased 30% of the 24,000 outstanding common shares of Towne Corporation at $15 per share as a long-term investment. On the date of purchase, the book value and the fair value of the net assets of Towne Corporation were equal. During the year, Towne Corporation reported net income of $19,200. Towne Corporation declared and paid cash dividends of $6,400 on December 30, 2020, to shareholders on record. As of December 31, 2020, common shares of Towne Corporation were trading at $20 per share. a. Record the entries in 2020 assuming that Allen Corporation had significant influence over Towne Corporation. Account Name Dr. Cr. Jan. 1. 2020 Date To record investment purchase. Dec. 30, 2020 To record receipt of dividends. Dec. 31, 2020 To record proportionate share of investee's net income. b. Indicate the effects of this investment on the 2020 income statement and year-end balance sheet. Note: Use a negative sign to indicate a loss. Income Statement 2020 Other Revenues and Gains Balance Sheet, December 31 2020 Assets Check