Company T had 32,000 outstanding shares of common stock, par value $10 per share. On January 1 of the current year, Company P purchased some of Company Tâs shares as a long-term investment at $23 per share. At the end of the current year, Company T reported the following: income, $48,000, and cash dividends declared during the year, $19,500. The fair value of Company T stock at the end of the current year was $20 per share. Required:
a. Prepare the journal entries for Company P at the dates indicated assuming 5,200 shares of Company T were purchased. Assume the investment will be held long term.
b. Prepare the journal entries for Company P at the dates indicated assuming 9,200 shares of Company T were purchased. Assume the investment will be held long term.