• LANIE INC. has 350,000 common shares authorized and 200,000 common shares issued and outstanding at $2 par value.
• On March 17, 2018, LANIE INC. issued to BLOOM INC. 35,000 shares of LANIE INC. common stock as a long-term investment at $40 per share.
• BLOOM INC. purchased 30,000 more shares of LANIE INC. stock on June 15, 2019 at $41.50 per share.
• On December 31, 2018, and December 31, 2019, the market value of the LANIE INC. stock is $42 and $43, respectively.
• BLOOM INC. sells 1,000 shares of LANIE INC. investment for $45 per share on March 31, 2020.
• Before any of the above:
• LANIE INC. has net income of $1,350,000 in 2018 and $849,000 in 2019.
• BLOOM INC. has net income of $520,000 in 2018 and $476,000 in 2019.

For BLOOM INC.(35 points)

• What is the appropriate reporting category for this stock investment and why? Support your answer.
• Prepare the necessary journal entries for 2018 and 2019 and 2020.
• What is the effect on the balance sheet for 2018 and 2019 and 2020?What is reported on the balance sheet?
• What is the effect on the income statement for 2018 and 2019 and 2020? What is reported on the income statement?

For LANIE INC. (15 points)

• Prepare the necessary journal entries for 2018 and 2019 and 2020.
• What is the effect on the balance sheet for 2018 and 2019 and 2020? What is reported on the balance sheet?
• What is the effect on net income for 2018 and 2019 and 2020?What is reported on the income statement?