On January 1,2020,Punk Ltd purchased 10% of the outstanding 1,000,000 common shares of Sunk for $200,000.Punk considers this investment to be a non-strategic investment.At the December 31,2020 year end,the fair value of this investment was $208,000.Sunk's profit in 2020 was $100,000.Sunk paid a dividend of $.60 per common share.On January 1,2021,Punk decided to buy an additional 25% of Sunk's 1,000,000 common shares for $500,000.This second purchase allowed Punk to significantly influence Sunk.In 2021,Sunk's profit was $140,000.Sunk paid dividends of $.50 per common share in 2021.Required: Make journal entries for 2020 and 2021 on Punk's books with respect to the Investment in Sunk.

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The Answer of On January 1,2020,Punk Ltd purchased 10% of the outstanding 1,000,000 common shares of Sunk for $200,000.Punk considers this investment to be a non-strategic investment.At the December 31,2020 year end,the fair value of this investment was $208,000.Sunk's profit in 2020 was $100,000.Sunk paid a dividend of $.60 per common share.On January 1,2021,Punk decided to buy an additional 25% of Sunk's 1,000,000 common shares for $500,000.This second purchase allowed Punk to significantly influence Sunk.In 2021,Sunk's profit was $140,000.Sunk paid dividends of $.50 per common share in 2021.Required: Make journal entries for 2020 and 2021 on Punk's books with respect to the Investment in Sunk.

On January 1,2020,Punk Ltd Purchased 10% of the Outstanding 1,000,000