On January 1, 20X0, Hunter Corporation issued 8,000 of its $15 par value shares to acquire 45 percent of the shares of Arrow Manufacturing. Arrow Manufacturing's balance sheet immediately before the acquisition contained the following items:

ARROW MANUFACTURING Balance Sheet January 1, 20X0
	Book Value				Fair Value
Assets
Cash and Receivables		$	36,000			$	36,000
Land			70,000				80,000
Buildings & Equipment (net)			126,000				156,000
Patent			80,000				80,000
Total Assets			312,000
Liabilities & Equities
Accounts Payable		$	126,000				126,000
Common Stock			138,000
Retained Earnings			48,000
Total Liabilities & Equities		$	312,000

On the date of the stock acquisition, Hunter's shares were selling at $40, and Arrow Manufacturing's buildings and equipment had a remaining economic life of 5 years. The amount of the differential assigned to goodwill is not impaired.

In the two years following the stock acquisition, Arrow Manufacturing reported net income of $85,000 and $55,000 and paid dividends of $27,000 and $45,000, respectively. Hunter used the equity method in accounting for its ownership of Arrow Manufacturing.

a.

Prepare the entry recorded by Hunter Corporation at the time of acquisition.

b-1.

Prepare the journal entries recorded by Hunter during 20X0 related to its investment in Arrow Manufacturing.

b-2.

Prepare the journal entries recorded by Hunter during 20X1 related to its investment in Arrow Manufacturing.

c.	What balance will be reported in Hunters investment account on December 31, 20X1?