On January 1, 1999, Long Company acquired 80% of the outstanding voting common stock of Fall Company for $4,032,000 cash. Long Company uses the equity method. During 1999, Fall reported $672,000 of net income and paid $288,000 in dividends. The stockholders' equity section of the December 31, 1998, balance sheet for Fall follows:

a. Prepare the general journal entries to record the investment and the effect of Fall's income and dividends on Long Company's accounts.

b. Prepare the elimination entry that would be made on the work sheet for a consolidated balance sheet as of the date of acquisition.

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Stockholders' equity: Paid-in capital: Common stock-$42 par Retained earnings Total stockholders' equity $4,200,000 840,000 $5,040,000