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On March 31, 2018, Chow Brothers, Inc., bought 8% of KT Manufacturing’s capital stock for $50.3...

On March 31, 2018, Chow Brothers, Inc., bought 8% of KT Manufacturing’s capital stock for $50.3 million. KT’s net income for the year ended December 31, 2018, was $80.1 million. The fair value of the shares held by Chow was $35.2 million at December 31, 2018. KT did not declare or pay a dividend during 2018.

Required:
1. Prepare all appropriate journal entries related to the investment during 2018.
2. Assume that Chow sold the stock on January 20, 2019 for $30.1 million. Prepare the journal entries to record the sale.

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