a. What would be Company Ps investment balance given the following information:

Company Ps ownership interest of Company S is 90%. The original cost of the investment is $500,000. The beginning retained earnings of Company S in prior to a dividend was $100,000 and two years later retained earnings of Company S was $280,000.

b. Record the journal entry to record equity income under the simple equity method at the end of two years for Company P, assuming the second years income for Company S was $100,000 and no dividend declarations were made.