2017 Jan 1 Purchased 5,000 shares (20) of Kramer Inc. outstanding shares at a cost of $100,000...

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Question:

2017

Jan 1 Purchased 5,000 shares (20) of Kramer Inc. outstanding shares at a cost of $100,000

May 31Kramer Inc. declared and paid a cash dividend of $1 per share

Dec 31Kramer Inc. announced that its net income for the year was $150,000 Market value of the 5,000 shares was determined to be $120,000

2018

Oct 1 Kramer Inc. declared and paid a cash dividend of $125 per share

Dec 31Kramer Inc. announced that its net income for the year was $50,000 Market value of the 5,000 shares was determined to be $160,000

2019

Jan 10 Newman Corporation sold all of its shares of Kramer Inc. for $180,000 cash

Required

1. Prepare journal entries on Newman Corporations books using the equity method, which assumes that the investment is an investment in an associate and significant influence exists

2. Prepare journal entries on Newman Corporations books assuming the investment is a nonstrategic equity investment Newman Corporation does not have significant influence over Kramer Inc. (another corporation owns 85 of Kramer Inc. shares)