On January 1. 2020, Defillo Corpotation purchased 40 percent (80,000 shares) of the common stock of Casals, Inc., for $1,200,000 in cash and began to use the equity method for the investment. The price paid represented a $300,000 payment in excess of the book value of Defillo's share of Casals' underlying net assets. Defillowas willing to make this extra payment because of a recently developed patent held by Casals with a 15-year remaining life. All other assets were considered appropriately valued on Calas' books.

Casals declares and pays a $250,000 cash dividend to its stockholders each year on September 15.

Casals reported net income of $800,000 in 2020 and $750,000 in 2021. Each income figure was earned evenly throughout its respective years.

On July 1,2021, Defllio sold 20,000 shares of its 80,000 shares in Casals for $350,000 in cash. Although it sold this interest, Defflio maintained the ability to significantly influence Casals' decision-making process.

Required: (Show all your calculations)

A. Prepare all necesary journal entries for Defllio's investment i Casals for the year 2020.

B. Prepare all necessary journal entries for Defllio's investment in Casals for the yar 2021.

C. Determine the balances for the following accounts in Defllio's books at the dates specified

	9/15/2020	12/31/2020	6/30/2021	12/31/2021
Investment in Casals
Equity in subsidiary earnings