On July 1, 2021, Clearwater Inc. purchased 8,750 shares of the outstanding common stock of Mountain Corporation at a cost of $187,500. Clearwater will have significant influence over the financial and operating policies of Mountain. Mountain had 35,000 shares of outstanding common stock. Assume the total book value and fair value of identifiable net assets is $700,000. Both companies have a January through December fiscal year. The following data pertains to Mountain Corporation during 2021:

Dividends declared and paid, January 1 - June 30 $12,500

Dividends declared and paid, July 1 - December 31 $12,500

Net Income, January 1 - June 30 $14,500

Net Income July 1 - December 31 $18,500

1. Prepare the entry to record the original investment in Mountain. 2. Compute the goodwill (if any) on the acquisition. 3. Prepare the necessary entries (other than acquisition) for 2021 under the equity method.

3a. Record the entry for cash dividend received under the equity method.

3b. Record the entry for investment revenue under the equity method