On January 1, 2014, Presto Corporation Purchased, as a Long-Term

Essay

On January 1, 2014, Presto Corporation purchased, as a long-term investment, 5,000 shares of the outstanding voting common stock of Shazam Corporation at $30 per share. During 2014, the following events occurred at Shazam Corporation: $\begin{array}{l}\text { Net Income reported for } 2014&\$20,000\\\text { Dividends declared and paid (per share) } &.50\\\text { Market price per share of common stock at December } 31,2014&28.00\end{array}$ Required:
A. Prepare the journal entry for Presto Corporation to record the investment (use an account titled "Long-term investment").
B. Assume two independent situations, Case A for 5,000 shares as 10% ownership and Case B for 5,000 shares as 40% ownership. For each situation, prepare the following entries:
1. To recognize net income for 2014.
2. To record cash dividend declared and received.
3. To record any adjustment to market price of stock at year-end.