The Coca-Cola Company owns 28 percent of the voting stock of Coca-Cola FEMSA, acquired at book value. Assume that Coca-Cola FEMSA reports income of $5 million for 2019. Coca-Cola FEMSA regularly sells canned beverages to Coca-Cola at a markup of 35 percent on cost. During 2019 Coca-Cola FEMSA's sales to Coca-Cola totaled $25 million. Coca-Cola's January 1, 2019, inventories include $1,350,000 purchased from Coca-Cola FEMSA. Coca-Cola's December 31, 2019, inventories include $1,215,000 purchased from Coca-Cola FEMSA. Required Prepare the 2019 journal entry on Coca-Cola's books to recognize its income from Coca-Cola FEMSA under the equity method.
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