Ravine Corporation purchased 30 percent ownership of Valley Industries for \(\$ 90,000\) on January 1, 20X6, when Valley had capital stock of \(\$ 240,000\) and retained earnings of \(\$ 60,000\). The following data were reported by the companies for the years 20X6 through 20X9:

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a. What net income would have been reported by Ravine Corporation for each of the years, assuming Ravine accounts for the intercorporate investment using (1) the cost method and (2) the equity method?

b. Give all appropriate journal entries for \(20 \mathrm{X} 8\) made by Ravine Corporation under both the cost and the equity methods.

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Dividends Declared Year 20X6 Operating Income. Ravine Corporation $140,000 Net Income, Valley Industries Ravine Valley $30,000 $ 70,000 $20,000 20X7 80.000 50,000 70.000 40.000 20X8 220,000 10.000 90.000 40.000 20X9 160,000 40,000 100.000 20.000