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Jones, Inc. uses the equity method of accounting for its investment in a 40%-owned investee that
earned $20,000 and paid $5,000 in dividends made the following entries:
Equity Investment $8,000
Investment Income $8,000
Cash $2,000
Dividend revenue $2,000
Assuming that Jones, Inc. had done each of the following in preparation of its 2020 statements,
and no adjustments were made, what would be the effect of each on the following on December
31, 2020:
i) Total Assets U/S O/S NE
ii) Retained Earnings U/S O/S NE
iii) Stockholders Equity U/S O/S NE

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  • 1. Jones, Inc. uses the equity method of accounting for its investment in a 40%-owned investee that earned $20,000 and paid $5,000 in dividends made the following entries: Equity Investment $8,000 Investment Income $8,000 Cash $2,000 Dividend revenue $2,000 Assuming that Jones, Inc. had done each of the following in preparation of its 2020 statements, and no adjustments were made, what would be the effect of each on the following on December 31, 2020: i) Total Assets U/S O/S NE ii) Retained Earnings U/S O/S NE iii) Stockholders Equity U/S O/S NE