Question

Whispering Corp. was a 30% owner of Metlock Company, holding 204,000 shares of Metlock’s common stock on December 31, 2019. The investment account had the following entries.

Investment in Metlock
1/1/18 Cost		$3,140,000	12/6/18 Dividend received		$160,000
12/31/18 Share of income		390,000	12/5/19 Dividend received		250,000
12/31/19 Share of income		520,000

On January 2, 2020, Whispering sold 102,000 shares of Metlock for $3,360,000, thereby losing its significant influence. During the year 2020, Metlock experienced the following results of operations and paid the following dividends to Whispering.

		Metlock Income (Loss)		Dividends Paid to Whispering
2020		$310,000		$53,000

At December 31, 2020, the fair value of Metlock shares held by Whispering is $1,840,000. This is the first reporting date since the January 2 sale.

(b) Compute the carrying amount of the investment in Metlock as of December 31, 2020 (prior to any fair value adjustment).

Carrying amount

$

(c) Prepare the adjusting entry on December 31, 2020, applying the fair value method to Whispering’s long-term investment in Metlock Company securities. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2020