On January 9, Pruett Company acquired 40% of the outstanding stock of Tolley Company for $130,000. For the year ending December 31, Tolley Companyearned income of $60,000 and paid dividends of $20,000.
Using the equity method, prepare the entries for Pruett Company for the purchase of the stock, share of Tolley income, and dividends received from Trolley Company.