On January 1, 2015, Chad Corp. paid $275,000 for 25% of the voting common stock of Barton Co. On that date, the book value of Barton was $850,000. A building with a carrying value of $170,000 was actually worth $230,000. The building had a remaining life of twenty years. Barton owned a trademark valued at $100,000 over cost that was to be amortized over 20 years. During 2015, Barton sold to Chad inventory costing $50,000, at a markup of 50% on cost. At the end of the year, Chad still owned some of these goods with a transfer price of $35,000. Chad uses a perpetual inventory system. Barton reported net income of $220,000 during 2015. This amount included an extraordinary gain of $25,000. Barton paid dividends totaling $30,000.
Required:
Prepare all of Chad's journal entries for 2015 in relation to Barton Co. Assume the equity method is appropriate for use. Record the journal entries in the ‘Problem 1’ worksheet in the distributed Excel File.