On January 1, 2011, Perelli Company purchased 90,000 of the 100,000 outstanding shares of common stock of Singer Company as a long-term investment. The purchase price of $4,984,000 was paid in cash. At the purchase date, the balance sheet of Singer Company included the following:

Current assets$2,930,300Long-term assets3,855,600Other assets758,500Current liabilities1,569,900Common stock, $20 par value2,009,700Other contributed capital1,877,800Retained earnings1,633,700

Additional data on Singer Company for the four years following the purchase are:

2011201220132014Net income (loss)$2,016,000$480,500($179,200)($323,200)Cash dividends paid, 12/30501,000501,000501,000501,000

Prepare journal entries under each of the following methods to record the purchase and all investment-related subsequent events on the books of Perelli Company for the four years, assuming that any excess of purchase price over equity acquired was attributable solely to an excess of market over book values of depreciable assets (with a remaining life of 15 years). (Assume straight-line depreciation.)

(a)

Perelli uses the cost method to account for its investment in Singer