Cost Method Journal Entry: Date Account Head and Entry Debit $ Credit $ 2014 Jan 1 Investment in Investee Company 150,000 Cash 150000 May 31 Cash 12000 Dividend Income 12000 Dec 31 No Entry 2015 Oct 1 Cash 8000 Dividend Income 8000 Dec 21 No Entry Dec 31 Cash 178000 Investment in Investee Company 150000 Income on sale of Investment 28000 EQUITY METHOD JOURNAL ENTRY: 2016 Jan 1 Investment in Investee company (20% stake) 150000 Cash 150000 May 31 Cash 12000 Investment account 12000 Dec 31 Investment Account 20000 Income Account \"equity in Investee Company\" 20000 2017 Oct 1 Cash 8000 Investment account 8000 Dec 21 Investment account 16000 Income Account \"equity in Investee Company\" 16000 Dec 31 Cash 178000 Investment in Investee company (20% stake) 150000 Income account \"gain on sales of investment in Investee Company\" 28000 Solution Cost Method Journal Entry: Date Account Head and Entry Debit $ Credit $ 2014 Jan 1 Investment in Investee Company 150,000 Cash 150000 May 31 Cash 12000 Dividend Income 12000 Dec 31 No Entry 2015 Oct 1 Cash 8000 Dividend Income 8000 Dec 21 No Entry Dec 31 Cash 178000 Investment in Investee Company 150000 Income on sale of Investment 28000 EQUITY METHOD JOURNAL ENTRY: 2016 Jan 1 Investment in Investee company (20% stake) 150000 Cash 150000 May 31 Cash 12000 Investment account 12000 Dec 31 Investment Account 20000 Income Account \"equity in Investee Company\" 20000 2017 Oct 1 Cash 8000 Investment account 8000 Dec 21 Investment account 16000 Income Account \"equity in Investee Company\" 16000 Dec 31 Cash 178000 Investment in Investee company (20% stake) 150000 Income account \"gain on sales of investment in Investee Company\" 28000.