Ranger Company was organized on January 2, 1989, for the purpose of investing in the shares of other companies. Ranger Company immediately issued 50,000 shares of \(\$ 5\) par, common stock for which it received \(\$ 250,000\) cash. On January 9, 1989, Ranger Company purchased 10,000 shares (20\%) of Trumpe Company's outstanding stock at a cost of \(\$ 250,000\). The following transactions and events subsequently occurred:

1989 Apr. 30 Trumpe Company declared and paid a cash dividend of \$1 per share.

Dec. 31 Trumpe Company announced that its net income for the year was \(\$ 125,000\).

1990 June 12 Trumpe Company declared and issued a stock dividend of one share for each two shares already outstanding.

Aug. 10 Trumpe Company declared and paid a cash dividend of \(\$ 0.80\) per share.

Dec. 31 Trumpe Company announced that its net income for the year was \(\$ 95,000\).

1991 Jan. 4 Ranger Company sold all of its investment in Trumpe Company for \(\$ 275,000\) cash.

Part 1. Because Ranger Company owns \(20 \%\) of Trumpe Company's outstanding stock, Ranger Company is presumed to have a significant influence over Trumpe Company.

\section*{Required}

1. Give the entries on the books of Ranger Company to record the above events regarding its investment in Trumpe Company.

2. Calculate the cost per share of Ranger Company's investment, as reflected in the investment account on January 1, 1991.

3. Calculate Ranger Company's retained earnings balance on January 5, 1991, after a closing of the books.

Part 2. Although Ranger Company owns \(20 \%\) of Trumpe Company's outstanding stock, a thorough investigation of the surrounding circumstances indicates that Ranger Company does not have a significant influence over Trumpe Company, and the cost method is the appropriate method of accounting for the investment.

\section*{Required}

1. Give the entries on the books of Ranger Company to record the above events regarding its investment in Trumpe Company.

2. Calculate the cost per share of Ranger Company's investment, as reflected in the investment account on January 1, 1991.

3. Calculate Ranger Company's retained earnings balance on January 5, 1991, after a closing of the books.