On January 1,2010,Presto Corporation Purchased,as a Long-Term Investment,5,000 Shares of the Outstanding

Not Answered

On January 1,2010,Presto Corporation purchased,as a long-term investment,5,000 shares of the outstanding common stock of Shazam Corporation at $30 per share.During 2010,the following events occurred at Shazam Corporation:


$\begin{array}{lccc}\text { Net Income reported for 2010} &\$20,000 \\ \text { Dividends declared and paid (per share)} &.50\\\text { Market price per share of common stock at December 31, 2010} & 28.00\\\end{array}$
Requirements:
A.Prepare the journal entry for Presto Corporation to record the investment.
B.Assume two independent situations,Case A - 10% ownership and Case B - 40% ownership.For each situation,prepare the following entries:
1.To recognize net income for 2010.
2.To record cash dividend declared and received.
3.To record market price of stock at year-end.