Harper, Inc., acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2020, for $320,500 in cash. The book value of Kinman's net assets on that date was $620,000, although one of the company's buildings, with a $78,400 carrying amount, was actually worth $133,650. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $126,000.

Kinman sold inventory with an original cost of $79,800 to Harper during 2020 at a price of $114,000. Harper still held $20,550 (transfer price) of this amount in inventory as of December 31, 2020. These goods are to be sold to outside parties during 2021.

Kinman reported a $56,400 net loss and a $22,200 other comprehensive loss for 2020. The company still manages to declare and pay a $30,000 cash dividend during the year.

During 2021, Kinman reported a $61,000 net income and declared and paid a cash dividend of $32,000. It made additional inventory sales of $128,000 to Harper during the period. The original cost of the merchandise was $80,000. All but 30 percent of this inventory had been resold to outside parties by the end of the 2021 fiscal year.

Prepare all journal entries for Harper for 2020 and 2021 in connection with this investment. Assume that the equity method is applied.

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No Date General Journal Debit Credit 1 01/01/2020 Investment in Kinman Co. 320,500 Cash 320,500 2 12/31/2020 Dividends receivable 12,000 Investment in Kinman Co. 12,000 3 12/31/2020 Cash 12,000 Dividends receivable 12,000 4 12/31/2020 Equity in Investee income Other comprehensive loss of Kinman Investment in Kinman Co. OOO 22,560 8,880 31,440 5 12/31/2020 4,730 > Equity in Investee income Investment in Kinman Co. 4,730 6 12/31/2020 2,235 Equity in Investee income Investment in Kinman Co. 2,235 7 12/31/2021 12,800 Dividends receivable Investment in Kinman Co. 12,800 8 12/31/2021 Cash 12,800 Dividends receivable 12,800 9 12/31/2021 Investment in Kinman Co. Equity in Investee income 10 12/31/2021 4,730 Equity in Investee income Investment in Kinman Co. 4,730 11 12/31/2021 2,235 Investment in Kinman Co. Equity in Investee income 2,235 12 12/31/2021 3,720 x Equity in Investee income Investment in Kinman Co. 3,720