Pawn Corporation purchased 30 percent of Shop Company's common stock on January 1, 20X5, by issuing preferred stock with a par value of $50,000 and a market price of $120,000. The following amounts relate to Shop's balance sheet items at that date Book Value Fair Value Assets Cash & Receivables Buildings & Equipment Less: Accumulated Depreciation Total Assets $200,000 400,000 $200,000 360,000 (100,000) $500,000 Liabilities & Equities Accounts Payable Bonds Payable Common Stock Retained Earnings Total Liabilities &Equities $ 50,000 200,000 100,000 150,000 $500,000 50,000 200,000 Shop purchased buildings and equipment on January 1, 20x0, with an expected economic life of 20 years. No change in overall expected economic life occurred as a result of the acquisition of Pawn's stock. The amount paid in excess of the fair value of Shop's reported net assets is attributed to unrecorded copyrights with a remaining useful life of eight years. During 20X5, Shop reported net income of $40,000 and paid dividends of $10,000 Required:
Prepare all journal enteried to be recorded on Pawn corporation;s books on 20x5 assuming it uses the equity method in accounting for its ownership of shop company.