Question: Equity method journal entries (price equals book value)
Prepare journal entries for the transactions below relating to an Equity Investment accounted for using the equity method.
a. An investor purchases 14,400 common shares of an investee at $9 per share; the shares represent 25% ownership in the investee and the investor concludes that it can exert significant influence over the investee.
b. The investee reports net income of $96,000.
c. The investor receives a cash dividend of $1.50 per common share from the investee.
d. The investor sells all 14,400 common shares of the investee for $144,600.