As a long-term investment at the beginning of the 2021 fiscal year, Florists International purchased 25% of Nursery Supplies Inc.'s 18 million shares for $66 million. The fair value and book value of the shares were the same at that time. During the year, Nursery Supplies earned net income of $28 million and distributed cash dividends of $2.00 per share. At the end of the year, the fair value of the shares is $62 million. Required: Prepare the appropriate journal entries from the purchase through the end of the year.

Dr Investment in Nursery supplies$66 million

Cr Cash $66 million

Dr Investment in Nursery supplies $7 million

Cr Investment Revenue $7 million

Dr Cash $9 million

Cr Investment in Nursery supplies$9 million

No Entry

Explanation:

Preparation of the appropriate journal entries from the purchase through the end of the year.

Dr Investment in Nursery supplies$66 million

Cr Cash $66 million

(To record purchase of 25% shares for $66 million)

Dr Investment in Nursery supplies ($28 million x 25%)$7 million

Cr Investment Revenue $7 million

(To record investor share of investee's net income)

Dr Cash (18 million shares x 25% share x $2 per share)$9 million

Cr Investment in Nursery supplies$9 million

(To record receipt of dividend)

No Entry