Ravine Corporation purchased 40 percent ownership of Valley Industries for $118,400 on January 1, 20X6, when Valley had capital stock of $251,000 and retained earnings of $45,000. During the period of January 1, 20X6, through December 31, 20X9, the market value of Ravine's investment in Valley's stock increased by $11,000 each year. The following data were reported by the companies for the years 20X6 through 20X9:

									Dividends Declared
Year	Operating Income, Ravine Corporation				Net Income, Valley Industries				Ravine				Valley
20X6		$	148,000			$	43,000			$	83,000			$	33,000
20X7			87,000				63,000				83,000				53,000
20X8			229,000				10,000				103,000				40,000
20X9			168,000				53,000				113,000				33,000

Required: a. What net income would Ravine Corporation have reported for each of the years, assuming Ravine accounts for the intercorporate investment either by carrying the investment at fair value, or by using the equity method? b-1. Give all appropriate journal entries for 20X8 that Ravine would make if it carries the investment at fair value. b-2. Give all appropriate journal entries for 20X8 that Ravine would make if it uses the equity method.

What net income would Ravine Corporation have reported for each of the years, assuming Ravine accounts for the intercorporate investment either by carrying the investment at fair value, or by using the equity method? Year 20X6 Net Income Fair Value Equity Method $ 172,000 $ 165,200 $ 192,000 $ 112,200 $ 256,000 $ 233,000 $ 192,200 $ 189,000 X 20X7 20X8 20X9 Give all appropriate journal entries for 20x8 that Ravine would make if it carries the investment at fair value. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No General Journal Credit Event 1 Debit 21,200 A Cash Dividend income 21,200 B 2 11,000 Investment in Valley stock Unrealized Gain on Valley Stock 11,000 Give all appropriate journal entries for 20x8 that Ravine would make if it uses the equity method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Credit Event 1 General Journal Cash Investment in Valley stock Debit 21,200 A 21,200 B 2 2 4,000 Investment in Valley stock Income from Valley 4,000