Mitchell Ltd acquired 20% of the voting shares of John Ltd on 1 July 2020 for $135 000. This acquisition resulted in Mitchell Ltd having significant influence over John Ltd. At the date of acquisition, the shareholders equity of John is as follows:

Share capital	185 000
Retained profits	53 000
	238 000

The following information relates to John Ltd as of 30 June 2021, the end of financial year FY2021:

Profit for FY2021	95 000
Dividend paid out of the profit of FY2021	35 000
Asset revaluation reserve	44 000

Additional information:

Blue Ltd is 90% owned by Mitchell Ltd and is Mitchells subsidiary.

During FY2021, John sold $360 000 of inventories to Blue Ltd and made a profit of $150 000. As of 30 June 2021, 10% of the inventories were still held by Blue Ltd.

Required:

a) Prepare journal entries for Mitchell Ltd in FY2021 to account for its investment in John Ltd using the Equity Method. Use the Reclassification Method to account for the profit and dividends that Mitchell shares from John.

Note 1) Use the provided journal entry template to enter your answer. 2) Workings/calculations or narrations are NOT required. 3) The template should provide enough space. However, if you find the space is insufficient in the template or encounter a table formatting issue, write your journal entries below the template and ensure labelling DR or CR.

b) Which financial statement does the investment in associates' accounts appear on? What does the investment in associates' accounts indicate?