Smart Cookie Corporation purchased 40% of the 320,000 outstanding shares of JT€™s Fine Foods, Inc. on January 1 of the current year. Smart Cookie acquired the shares at a price of $ 3.20 per share. The following additional data were available for JT€™s Fine Foods, Inc. on the date of acquisition.

JT€™s Fine Foods, Inc. reported net income of $ 64,000 at the end of the current year and declared and paid cash dividends of $ 25,600 during the current year.
Required
a. Compute the amount of goodwill implied on Smart Cookie€™s acquisition of JT€™s Fine Foods shares.
b. Prepare all journal entries necessary to account for this investment in JT€™s under the equity method.

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Description Current Assets Depreciable Assets (10-year remaining life/straight-line depreciation) Book Values S256,000 192,000 Fair Values S256,000 230,400 S44.00 S486,400 Total Assets Liabilities S 32,000 S 32,000 S320,000 96,000 $416.000 $3 Contributed Capital Common Stock and Additional Paid in Capital) Retained Earnings S320,000 134,400 $454,400 Total Shareholders' Equity Total Liabilities and Stockholders Equity S44,000 $486400