Cooke Company acquires an 89% interest in Hill Company common stock for $338,200 cash on January 1, 20X1.At that time, Hill Company has the following balance sheet:

AssetsLiabilities and Equity

Current assets...............$ 40,000Current Liabilities...............$ 90,000

Buildings..........................280,000Common Stock ($5 par)......115,000

Equipment..................... 410,000Paid-in capital in excess of par185,000

Accumulated depreciation...(140,000)270,000Retained earnings................200,000

Total assets...............................$590,000Total liabilities and equity.$590,000

Appraisals indicate that assets/liabilities have a fair value and remaining life as follows:

Fair ValuesRemaining Life (years)

Current assets43,0001

Buildings180,0008

Equipment230,00010

Current Liabilities69,0001

Any remaining excess is Goodwill or Gains on Acquisition.

Hill Company experiences the following changes in retained earnings during 20X1 and 20X2:

Retained earnings, January 1, 20X1....................................$200,000

Net Income, 20X1....................................... $ 10,000

Dividends paid in 20X1.......................................(21,000)(11,000)

Balance, December 31, 20X1..........................................$189,000

Net Loss, 20X2.............................................$(51,000)

Dividends paid in 20X2.......................................(12,000)(63,000)

Balance, December 31, 20X2..........................................$126,000

Required:

1)Prepare a value analysis sheet for the investment in Hill Company.

2)Prepare journal entries that Cooke Company would make on its books to record income earned and/or dividends received on its investment in Hill Company during 20X1 and 20X2 under the following methods:simple equity and sophisticated equity.

3)Report Cooke's book values of 'Investment in Hill Company' at the end of 20X1 and 20X2 under the following methods:simple equity and sophisticated equity.

NOTE:Negative numbers in any elimination entry will earn azeroon that segment of the solution.