Question 1 - On February 27, Ball Corporation acquired 4,000 shares of the 50,000 outstanding shares of Bat Co. common stock at 40.75 plus commission charges of $200. On July 8, a cash dividend of $1.75 per share and a 2% stock dividend were received. Record the entries to record (a) the purchase of stock, (b) the receipt of dividends, and (c) the sale of the 1,000 shares.
Question 2 - At a total cost of $1,960,000, Turner Corporation acquired 70,000 shares of May Corp. common stock as a long-term investment. Turner Corporation uses the equity method of accounting for this investment. May Corp. has 280,000 shares of common stock outstanding, including the shares acquired by Turner Corporation. Journalize the entries by Turner Corporation to record the following information:
a) May Corp. reports net income of $3,000,000 for the current period.
b) A cash dividend of $3.80 per common share is paid by May Corp. during the current period.