Business, 20.02.2020 06:51 Rogeartest4

Ravine Corporation purchased 30 percent ownership of Valley Industries for $88,500 on January 1, 20X6, when Valley had capital stock of $253,000 and retained earnings of $42,000. The following data were reported by the companies for the years 20X6 through 20X9:

Dividends Declared

Year Operating Income,
Ravine Corporation Net Income,
Valley Industries Ravine Valley
20X6 $ 151,000 $ 39,000 $ 77,000 $ 29,000
20X7 94,000 59,000 77,000 49,000
20X8 236,000 10,000 97,000 40,000
20X9 171,000 49,000 107,000 29,000

Required:
a.
What net income would Ravine Corporation have reported for each of the years, assuming Ravine accounts for the intercorporate investment using the cost method and the equity method?

b-1. Give all appropriate journal entries for 20X8 that Ravine made under the cost method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b-2. Give all appropriate journal entries for 20X8 that Ravine made under the equity method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field

Answers: 1

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Ravine Corporation purchased 30 percent ownership of Valley Industries for $88,500 on January 1, 20X...

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