On January 1, 2014, Grgante Corporation purchased 25% of the common stock outstanding of Long Corporation for $270,000. During 2014, Long Corporation reported net income of $80,000 and paid cash dividends of $40,000. The balance of the Stock Investments-Long account on the books of Grgante Corporation at December 31, 2014 is

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The initial investment made by Grgante Corporation was $270,000 for 25% of Long Corporation's common stock outstanding, which means that the total value of Long Corporation's common stock was $1,080,000. Since Grgante Corporation only owns 25%, their share of Long Corporation's net income is $20,000 ($80,000 x 25%). The balance of the Stock Investments-Long account on the books of Grgante Corporation at December 31, 2014 would be $280,000, calculated as follows:

Initial investment: $270,000
Add share of net income: $20,000
Less dividends received: $10,000 (25% x $40,000)
Balance at December 31, 2014: $280,000

On January 1, 2014, Grgante Corporation Purchased 25% of the Common