On January 1, Wildhorse Corporation purchased a 25% equity investment in Shane Corporation for $148,900. At December 31, Shane declared and paid a $84,400 cash dividend and reported net income of $385,900.

Journalize the transactions

The journal entries are shown below:

Stock investment A/c Dr $148,900

To Cash A/c $148,900

(Being the equity investment is purchased in cash)

Cash A/c Dr $21,100 ($84,400 * 25%)

To Stock investment A/c $21,100

(Being the stock dividend is received)

Stock investment A/c Dr $96,475 ($385,900 * 25%)

To Revenue from Stock Investments A/c $96,475

(Being the revenue is recorded)