Problem
Jax Company purchased 90% of the outstanding common stock of Steve Company on January 1, 2014 for $1,000,000. During the next three years, Jax had the following income and dividends paid:
Year: Income: Dividends:
2014 $10,000 0
2015 $10,000 0
2016 $45,000 $35,000
Prepare the journal entries made under both COST METHOD and EQUITY METHOD and then compute the ending balance in the "investment" account for both methods.