McComb Inc.earns $1,350,000 and pays cash dividends for $450,000 during 2022.SFX Corporation owns 70,000 of the 210,000 outstanding shares of McComb.What amount should SFX show in the investment account at December 31, 2022 if the beginning of the year balance in the account was $150,000?

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The investment account should be increased by the share of McComb's earnings, which is $1,350,000 x 70,000 / 210,000 = $450,000. The beginning balance of $150,000 plus the $450,000 share of earnings equals $600,000. However, SFX received $450,000 in cash dividends, which reduces the investment account balance to $600,000 - $450,000 = $150,000.