On January 1, 2010, Alsip Corp. acquired 30 percent (13,000 shares) of Stone Services Inc. common stock for $1,300,000 as a long-term investment. Data from Stone's 2010 financial statements include the following:
Net income ............................................ $330,000
Less cash dividends paid ..........................160,000
Increase in retained earnings ....................$170,000
The market value of Stone Services Inc. common stock on December 31, 2010, was $98 per share. Alsip does not have any other noncurrent investments in securities.
Prepare the necessary journal entries for Alsip's investment in Stone Services Inc. common stock under
(1) the cost method classified as available-for-sale securities.
(2) the equity method.