Penn Corporation acquired 75 percent of the voting common stock of Eastland Company on January \(1,20 \mathrm{X} 2\), for \(\$ 648,000\). The purchase differential was assigned to equipment with a remaining economic life of eight years at the date of acquisition. On that date, Eastland reported the following stockholders' equity balances:

Penn Corporation reported retained earnings of \(\$ 485,000\) at January 1, 20X2, and operating income of \(\$ 65,000, \$ 80,000\), and \(\$ 50,000\) in 20X2, 20X3, and 20X4, respectively. Penn and Eastland paid dividends of \(\$ 30,000\) and \(\$ 20,000\), respectively, each of the three years. Eastland had 30,000 shares of common stock outstanding throughout the three-year period. In the consolidated balance sheet prepared at December \(31,20 \times 4\), noncontrolling interest was reported at \(\$ 227,500\).
\section*{Required}

a. Compute the balance in retained earnings reported by Eastland Company on December 31, \(20 \times 4\).

b. Compute the balance in the investment account reported by Penn Corporation on December 31, 20X4, assuming Penn uses the equity method in accounting for its ownership of Eastland.

c. Compute the balance in consolidated retained earnings on December 31, \(20 \mathrm{X} 4\).

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Common Stock, $10 par value Additional Paid-In Capital Retained Earnings $300.000 180.000 320.000