Cost Method vs Equity Method Journal

2. Prepare journal entries. Be sure all dates agree with the problem and are not today’s dateCost methodYear 2014Jan 1Investor corporations purchased 8,000 shares (20% of investee company’s outstanding stock) at a cost of $ 150,000.May 31Investee company declared and paid a cash dividends of $1.50 per shareDec 31Investee company announced that its net income for the year was $100,000Cost methodYear 2015Oct 1Investee company declared and paid a cash dividend of $1.00 per shareDec 21 Investee company announced its net income for the year in the amount of $ 80,000Dec 31Investor corporation sold all of its shares on investee company for $ 178,000 cashEquity methodYear 2016Jan 1Investor corporations purchased 8,000 shares (20% of investee company’s outstanding stock) at a cost of $ 150,000.May 31Investee company declared and paid a cash dividends of $1.50 per shareDec 31Investee company announced that its net income for the year was $100,000Year 2017Oct 1Investee company declared and paid a cash dividend of $1.00 per shareDec 21 Investee company announced its net income for the year in the amount of $ 80,000Dec 31Investor corporation sold all of its shares on investee company for $ 178,000 cash Required:Cost method: Prepare journal entries for years 2014 and 2015 in QuickBooks™ on Investor Corporation’s books using the cost method, which assumes that investor does not have significant influence over Investee (for example, another corporation owns 70% of Investee Company’s stock).Equity method: Prepare in QuickBooks™ the journal entries for years 2016 to 2017 on Investor Corporation’s books using the equity method, which assumes that Investor has significant influence over Investee Company.Go to widget at the company name, select settings, and then chart of accounts. Click on cash for cost method and you will see the transactions for the cost method. Click on cash for equity method and you will see the transactions for the equity method. Copy and paste (or export) each to word document, being sure two columns of number show and submit to the assignment area.In the word submission: Write a brief report between 200 and 300 words in length outlining your recommendations to senior management based on the information presented here.

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