1 Pursley, Inc. acquires 10% of Ritz Corporation on January 3, 2017, for $80,000 when the book value of Ritz was $800,000. Pursley adjusted the investment to its fair value of $162,500 at December 31, 2017. During 2017 Ritz reported net income of $125,000 and paid dividends of $30,000. On January 2, 2018, Pursley purchased an additional 20% of Ritz for $325,000, giving Pursley the ability to significantly influence the operating policies of Ritz. Any excess of cost over book value is attributable to goodwill with an indefinite life. What journal entry(ies) is (are) required on January 2, 2018? 1/02/2018 :- Investment in Ritz corp # 80,000 cash # 80,000 During 2018 Ritz reported net income of $135,000 and paid dividends of $40,000 What was the balance of investment reported on Dec 31st, 2018? Q2. Steven Company owns 40% of the outstanding voting common stock of Nicole Corp. and has the ability to significantly influence the investee's operations. On January 3, 2018, the balance in the Investment in Nicole Corp. account was $503,000. Amortization associated with this acquisition is $12,000 per year. During 2018, Nicole earned net income of $120,000 and paid cash dividends of $40,000. Previously in 2017, Nicole had sold inventory costing $35,000 to Steven for $50,000. All but 25% of that inventory had been sold to outsiders by Steven during 2017; the remainder was sold in 2018. Additional sales were made to Steven in 2018 at an intra-entity selling price of $75,000. The goods in the intra-entity sales cost Nicole $54,000. Only 10% of the 2018 intra-entity purchases from Nicole had not been sold to outsiders by the end of 2018. What amount of gross profit on 2017 intra-entity sales should Steven defer at December 31, 2017? 2018? What is the Journal Entry needed under equity method to eliminate unearned gross profit What amount of gross profit on 2018 intra-entity sales should Steven defer at December 31, for 2018? What amount of equity income would Steven have recognized in 2018 from its ownership interest in Nicole? What was the balance in the Investment in Nicole Corp. account at December 31, 2018? Q3. During January 2017, Wells, Inc. acquired 30% of the outstanding common stock of Wilton Co. for $1,500,000. This investment gave Wells the ability to exercise significant influence over Wilton. Wilton's assets on that date were recorded at $6,400,000 with liabilities of $3,000,000. Any excess of cost over book value of Wells' investment was attributed to unrecorded patents having a remaining useful life of ten years. In 2017, Wilton reported net income of $600,000. For 2018, Wilton reported net income of $750,000. Dividends of $200,000 were paid in each of these two years. What was the reported balance of Wells' Investment in Wilson Co. at December 31, 2018 and how much was the reported investment income in Wilson for 2018