Problem 1 A) On January 1, 2019, High Company pays $70,000 for a 10 percent interest in Low Company's common stock. Because market quotes for Low's stock are readily available on a continuing basis, the investment account has been appropriately maintained at fair value. On January 1, 2020, High acquires an additional 20 percent of Low Company for $176,000. This second purchase provides High the ability to exert significant influence over Low, and High will now apply the equity method. At the time of this transaction, Low had a January 1, 2020 book value of $650,000 although Low's equipment with a four-year remaining life was undervalued by $80,000 relative to its fair value. During these two years, Low reported the following operational results (cash dividends are declared and paid in July each year): Year Net Income Cash Dividends Fair Value at January 1 $700,000 880,000 2019 2020 $210,000 270,000 $110,000 110,000 Required a. What income did High originally report for 2019 in connection with this investment? b. On comparative financial statements for 2019 and 2020, what figures should High report in connection with this investment? B) In 2021, Low Company reports $400,000 in income and $60,000 in other comprehensive income from foreign currency translation adjustments. The company declares and pays a $120,000 cash dividend. During this fiscal year, High sells inventory costing $80,000 to Low for $100,000. Low continues to hold 50 percent of this merchandise at the end of 2021. High Maintains 30 percent ownership of Low throughout the period. Required Prepare all necessary journal entries for High for the year 2021