(Learning Objective 2: Accounting for transactions under the equity method) Nelson Corporation owns equity-method investments in several companies. Suppose Nelson paid

$1,500,000 to acquire a 25% investment in Payton Software Company. Payton Software reported net income of $670,000 for the fi rst year and declared and paid cash dividends of

$400,000.

❙ Requirements 1. Record the following in Nelson’s journal:

(a) purchase of the investment,

(b) Nelson’s proportion of Payton Software’s net income, and

(c) receipt of the cash dividends.

2. What is the ending balance in Nelson’s investment account?