On January 4, 2016, Spandella Company purchased 175,000 shares of Filington Company directly from one of the founders for a price of $30 per share. Filington has 500,000 shares outstanding, including the Penman shares. On July 2, 2016, Filington paid $620,000 in total dividends to its shareholders. On December 31, 2016, Filington reported a net income of $1,050,000 for the year. Spandella uses the equity method in accounting for its investment in Filington.
a. Provide the Spandella Inc. journal entries for the transactions involving its investment in Filington Inc. during 2016.
b. Determine the December 31, 2016, balance of the Investment in Filington Company. Stock account.