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As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Inc.'s 420,000 shares for $500,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC’s net assets were equal. During the year, AMC earned net income of $270,000 and distributed cash dividends of 25 cents per share. At year-end, the fair value of the shares is $527,000.Required information Exercise 12-19 (Algo) Investment securities and equity method investments compared [LO12-5, 12-6] [The fJournal entry worksheet < 1 2 3 4 Record the purchase of AMC Supplies shares for $500,000 as a long-term investment. Note: EnJournal entry worksheet Record the cash dividend of 25 cents per share. Note: Enter debits before credits. Transactions GenerJournal entry worksheet < 1 2 3 Record any necessary year-end adjusting journal entry when the fair value of the shares heldExercise 12-19 (Algo) Part 2 2. Assume significant influence was acquired. Prepare the appropriate journal entries from the pJournal entry worksheet 2 3 4 Record the purchase of AMC Supplies shares for $500,000 as a long-term investment. Note: EnterJournal entry worksheet < 1 2 3 4 Record Painters Equipments share of AMC Supplies $270,000 net income. Note: Enter debitsJournal entry worksheet < 1 2 F 3 Record the cash dividend of 25 cents per share. Note: Enter debits before credits. TransactJournal entry worksheet < 1 2 3 Record any necessary year-end adjusting journal entry when the fair value of the shares held

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Ignore the order of commas in amount. Naming covention is not available can be slightly different: Solution: 1) Date Credit 5

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