Fredo, Inc., purchased 10% of Sonny Enterprises for $1,000,000on January 1, 2018. Sonny recognized a total of $340,000 net incomeduring 2018, paid $24,000 of dividends to Fredo during 2018, and atDecember 31, 2018, the market value of the Sonny investmentincreased to $1,034,000. Required: Prepare the journal entriesnecessary to account for the Sonny investment, assuming that Fredo(1) lacks significant influence or (2) has significant influenceover the operating and financial policies of the investee.
Required 1
Record the entry for investment in Sonny Enterprises.
Record the entry for cash dividend received.
Record the net unrealized holding gain or loss for anavailable-for-sale investment.
Required 2:
Record the entry for investment in Sonny Enterprises.
Record the revenue from Sonny Enterprise during 2018.
Record the receipt of dividend during 2018.
