On January 1, 2017, XYZ Company purchased 10,000 shares of the stock of Perry Co, and did obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $50,000, and represents a 40% ownership stake. Perry made $60,000 of net income in 2017, and paid dividends of $10,000. The price of Perry’s stock increased from $5 per share at the beginning of the year, to $7 per share at the end of the year.

Requirements:

1. Prepare the January 1 and December 31 general journal entries for XYZ Company.
2. How much should the XYZ Company report on the balance sheet for the investment in Perry at the end of 2017?

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