On August 4, 2019, Bennett Corporation purchased 2,000 shares of Plummer Company for $180,000. The following information applies to the stock price of Plummer Company:

Plummer Company declares cash dividends of $3.50 per share on June 1 of each year and pays the dividends on July 1 of each year.

Required:

1. Prepare journal entries to record the facts in the case, assuming that Bennett purchased the shares as a passive investment.

2. Prepare journal entries to record the facts in the case, assuming that Bennett used the equity method to account for the investment. Bennett owns 30 percent of Plummer and Plummer reported $30,000 in income each year.

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Price $85 12/31/2019 12/31/2020 91 94 12/31/2021