Use this information to answer Questions #1& 2(related to Ch. 12) (Worth 5 points each):

As a long-term investment, on January 1, 2022, Painters Equipment Company purchased 200,000 shares of stock in Bristol Corporation AMC Supplies Inc for $960,000. On the date of the purchase, the fair value and book value of AMC Supplies Company net assets were the equal. During the year 2022, AMC supplies earned net income of $500,000 and distributed cash dividends of 25 cents per share. At the end of 2022 the fair value of AMCs shares acquired by Painters Equipment Company. amounted to $1,010,000.

Question #1

Assume that the 200,000 shares of stock that Painters Equipment Company acquired represents 10% of AMC's shares and that no significant influence was acquired. Prepare all of the journal entries that Painters Company would record during 2022 associated with its initial acquisition and continued ownership of AMC Supplies stock, including any impact of AMC's earnings and the dividend they paid during the year.

Question #2

Assume that the 200,000 shares of stock that Painters Company acquired represents 20% of AMC's shares and that significant influence was indeed acquired. Prepare all of the journal entries that Painters Company would record during 2022 associated with its initial acquisition and continued ownership of AMC Supplies stock, including any impact of AMC's earnings and the dividend they paid during the year.