As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Inc.'s 280,000 shares for $336,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC's net assets were equal. During the year, AMC earned net income of $275,000 and distributed cash dividends of 30 cents per share. At year-end, the fair value of the shares is $363,500.
1.Prepare a journal entry to record Watney's receipt of six months of interest revenue.
2. Prepare a journal entry (if any is required) to record any unrealized gains or losses on the Hamel bonds during 2013.