Mitchell Ltd acquired 20% of the voting shares of Ralph Ltd on 1 July 2021 for $120 000. This acquisition resulted in Mitchell Ltd having significant influence over Ralph Ltd. At the date of acquisition, the shareholder's equity of Ralph is as follows:

Share capital	150 000
Retained profits	48 000
	198 000

The following information relates to Ralph Ltd as at 30 June 2022, the end of financial year FY2022:

Profit for FY2022	80 000
Dividend paid out of the profit of FY2022	45 000
Asset revaluation reserve	36 000

Additional information:

• Blue Ltd is 70% owned by Mitchell Ltd and is Mitchell's subsidiary.
• During FY2022, Ralph sold $320 000 of inventories to Blue Ltd and made profit of $150 000. As at 30 June 2022, 40% of the inventories were still held by Blue Ltd.

a) Prepare journal entries for Mitchell Ltd in FY2022to account for its investment in Ralph Ltd using theEquity Method.Use theReclassification Methodto account for the profit and dividendsthat Mitchell shares from Ralph.

b) Which financial statement does the investment in associates account appear? What does the investment in associates account indicate?