Equity method and consolidation elimination entries. Hanna Company purchased 100 percent of the common stock of Denver Company on Januai7 2 for $550,000.

The common stock of Denver Company at this date was $200,000. and the retained earnings balance was $350,000. During the year, net income of Denver Company was $120,000: dividends declared were $40,000. Hanna Company uses the equity method to account for the investment.

a. Give the journal entry made by Hanna Company during the year to account for its investment in Denver Company.

b. (Requires coverage of Appendix 11.1.) Give the elimination entry for the investment account, assuming that the consolidation work sheet uses preclosing trial balance data.

(Appendix)