XYZ Company had the following transactions related to ABC Company over a two-year period...

XYZ Company had the following transactions related to ABC Company over a two-year period:

Year 1

1. On January 1, XYZ purchased 35 percent ownership of ABC Company for $700,000 cash.

2. ABC Company had net income of $70,000 for the year.

3. At year-end, ABC Company paid its shareholders dividends of $60,000.

Year 2

1. XYZ Company purchased on January 1 an additional 5 percent of ABC Company’s stock for $75,000 cash.

2. ABC Company declared a 10 percent stock dividend.

3. ABC Company had net income of $150,000 for the year.

4. At year-end, ABC Company paid its shareholders dividends of $100,000.

Required:

Prepare the journal entries for XYZ Company’s books for the above transactions.