The following activities relate to the Hilton Company during the years 2002 and 2003: 2002 Feb. 15 — Hilton purchased 5,000 shares of Brock Equipment stock for $35 per share. Dee 1 Hilton received a $1.25-per-share cash dividend from Brock Equipment. 31 Brock Equipment common stock had a closing market price of $32 per share. Brock’s 2002 net income was $60,000. 2003 July 1 Hilton sold all 5,000 shares of Brock Equipment stock for $37 per share. Additional information: Brock Equipment had 25,000 shares of common stock outstanding on January 1, 2002. 1. Prepare journal entries to record the transactions assuming:

a. The securities are classified as available-for-sale.

b. The equity method is used. 2. Show the amounts that would be reported on the financial statements of Hilton Company at December 31, 2002, under each assumption. 3. Interpretive Question: What is the minimum number of shares of stock that Brock could have outstanding in order for Hilton to use the equity method?