EQUITY METHOD FOR LONG-TERM INVESTMENTS IN COMMON STOCK.

On January 1, 19x38, Hill Corporation acquired 40% of the outstanding common stock

(400 of 1,000 outstanding shares) of Valley Manufacturing, Inc., for $60,000, which equals its book value to Valley. On December 31, 19x83, Valley Manufacturing reported net income of $30,000 and declared and paid a cash dividend of $11,500 ($4,600 to Hill).

REQUIRED:

1. Write the journal entries made by Hill Corporation to record the transactions related to its investment in Valley Manufacturing.

2. Give the title and amount of each item on the December 31, 19x38, balance sheet related to the investment. Name the balance sheet section in which each item appears.