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 1June 30	$	12,500
Dividends declared and paid, July 1December 31	$	12,500
Net income, January 1June 30	$	14,500
Net income, July 1December 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.