Question: Cayman Company purchased 100 of the common stock of Denver
Cayman Company purchased 100% of the common stock of Denver Company on January 2 for $550,000. The common stock of Denver at this date was $200,000, and the retained earnings balance was $350,000. During the year, net income of Denver was $120,000 and dividends declared were $30,000. Cayman uses the equity method to account for the investment. Give the journal entries Cayman made during the year to account for its investment in Denver.
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