Winston Corporation purchased 40 percent of the stock of Fullbright Company on January 1, 20X2, at underlying book value. The companies reported the following operating results and dividend payments during the first three years of intercorporate ownership:

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Compute the net income reported by Winston Corporation for each of the three years, assuming it accounts for its investment in Fullbright Company using

(a) the cost method and

(b) the equity method.

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Winston Corporation Year Operating Income 20X2 $100.000 20X3 60,000 20X4 250,000 Fullbright Company Dividends Net Income Dividends $ 40.000 $70,000 $30,000 80.000 120,000 40.000 60,000 25,000 50,000