Herbert, Inc. acquired all of Rambis Companys outstanding stock on January 1, 2020 for $ 574,000 in cash. Annual excess amortization of $ 12,000 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $ 400,000, and Rambis reported a $ 200,000 balance. Herbert reported internal income of $ 40,000 in 2020 and $ 50,000 in 2021 and paid $ 10,000 in dividends each year. Rambis reported net income of $ 20,000 in 2020 and $ 30,000 in 2021 and paid $ 5,000 in dividends each year.

Assume that Herberts internal income figures above do not include any income from the subsidiary. The parent uses the equity method.

A. What is the amount reported as consolidated Retained Earnings on December 31, 2020?

B. What is the amount reported as consolidated Retained Earnings on December 31, 2021?

C. What is the Investment in Rambis account balance on Herberts books on January 1, 2020 when the parent uses the equity method?

D. What is the Investment in Rambis account balance on Herberts books on January 1, 2021 when the parent uses the equity method?

2020 journal entries for herbert inc. - to record acquisition transaction, to record receipt of dividend, to accrue the subsidiary income, to recognize amortization on allocations

Investment in Rambis					Equity in Subsidiary Earnings
	-	-				-	-

Herbert's internal income, plus equity in investee income - net income

retained earnings - 1-1-20 plus net income, minus dividends paid - retained earnings - 12/31/20

Then 2021 Journal entries for Herbert Inc. - to record receipt of dividend, to accrue the subsidiary income, to recognize amortization - with more t- accounts like above

Herberts internal income plus equity in investee income - net income

retained earnings 1/1/21 plus net income, minus dividends paid - retained earnings 12/31/21

	A	2020 Consolidated Retained Earnings
	B	2021 Consolidated Retained Earnings
	C	2020 Investment in Ramis balance
	D	2021 Investment in Ramis balance