Answer and Explanation:
The Journal entry is shown below:-
a. Cash Dr, $150,000 ($600,000 × 25%)
To Investment in Taylor $150,000
(Being receipts of dividends is recorded)
b. Investment in Taylor $195,000
Equity in net income of Taylor $195,000
(Being earning of the investee is recorded)
Working note:-
Equity in net income of Taylor = Santon's share of Taylor's reported income - Revaluation adjustment
= ($1,500,000 × 25%) - ($10,800,000 ÷ 15 × 25%)
= $375,000 - $180,000
= $195,000