Response to the following problem:
Newbold, Inc., owns equity-method investments in several other departmentstore companies. Newbold paid $2 million to acquire a 20% investment in Italian Imports Company. Italian Imports reported net income of $780,000 for the first year and declared and paid cash dividends of $500,000.
Record the following in Newbold's journal:
(a) purchase of the investment,
(b) its proportion of Italian Imports' net income, and
(c) receipt of the cash dividends.