On January 1, 2014, Valentine Corporation purchased 25% of the common stock outstanding of Betz Corporation for $100,000. During 2014, Betz Corporation reported net income of $40,000 and paid cash dividends of $24,000. The balance of the Stock Investments-Betz account on the books of Valentine Corporation at December 31, 2014, is

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Valentine Corporation's investment in Betz Corporation should be adjusted for its share of Betz's net income and dividends. The share of net income is 25% of $40,000, which is $10,000. The share of dividends is 25% of $24,000, which is $6,000. The investment account increases by the share of net income and decreases by the share of dividends: $100,000 + $10,000 - $6,000 = $104,000.

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