Pearson Company acquired \(75 \%\) of the outstanding voting common stock of Frost Company for \(\$ 1,444,800\) cash on January 1,1999 . The investment is accounted for under the equity method. During 1999, 2000, and 2001, Frost Company reported the following:

a. Prepare general journal entries to record the investment and the effect of the subsidiary's income, losses, and dividends on Pearson Company's accounts.

b. Compute the balance in the investment account on December 31, 2001

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Net Income (loss) Dividends Paid 1999. 2000... 2001 $357,840 $290,640 (45,360) -0- 108,360 72,240