4. Pratt Company owns 15% of the stock of Sendon Corporation. The investment was purchased for $200,000. At the beginning of 2020, it had a fair value of $230,000. At the end of 2020, its fair value is $250,000. Sendon reported net income of $100,000 for 2020, and declared and paid cash dividends of $60,000. Pratt sells products to Sendon at a markup of 20% on cost. Sendons ending inventory for 2020 included a balance of $10,800 for products purchased from Pratt. Required Prepare the journal entries, Pratt makes in 2020 to record the above facts, assuming:

a. Pratt treats its investment as an investment with no significant influence, with the intention of holding the investment for several years.

b. Pratt treats its investment as having significant influence and uses the equity method.