On January 1,2016,American Corporation purchased 25% of the outstanding voting shares of Short Supplies common stock for $210,000 cash.On that date,Short's book value and fair value were both $840,000.The equity method is deemed appropriate for this investment.Short's net income reported on December 31,2016,was $80,000.During 2016,Short also paid cash dividends in the amount of $24,000.
Required:
Prepare the journal entries necessary to record the above information on American Corporation's books during 2016.

Question

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The Answer of On January 1,2016,American Corporation purchased 25% of the outstanding voting shares of Short Supplies common stock for $210,000 cash.On that date,Short's book value and fair value were both $840,000.The equity method is deemed appropriate for this investment.Short's net income reported on December 31,2016,was $80,000.During 2016,Short also paid cash dividends in the amount of $24,000.
Required:
Prepare the journal entries necessary to record the above information on American Corporation's books during 2016.

On January 1,2016,American Corporation Purchased 25% of the Outstanding Voting