Recording Investments in SecuritiesEquity Method On January 1, 2020, Rae Company purchased 8,000 of the 40,000 shares outstanding of common stock (par $ 1) of Sundem Corporation for $80,000 cash. Assume that the fair value and book value of all net assets of Sundem were the same at that time. This is the only long-term equity investment held and the ownership of Sundem shares represents a significant interest. The accounting periods for both Rae and Sundem end on December 31. Sundem Corporation Year 2020 Income reported for 2020 Cash dividend per share declared and paid on December 15, 2020 Market price per share of stock, December 31, 2020 Year 2021 Income reported for 2021 Cash dividend per share declared and paid on December 15, 2021 Market price per share of stock, December 31, 2021 $40,000 $1.50 $12.00 $50,000 $1.50 $11.00 Journal Entries Financial Statement Presentation Journal Entries Financial Statement Presentation a. Provide all of the entries required for Rae Company for 2020 and 2021 including the investment purchase, receipt of declared dividends, and year-end adjusting entries. . > > Date Account Name Jan. 1, 2020 Investment in Stock Cash Dec. 15, 2020 Cash Investment in Stock Dec. 31, 2020 Investment in Stock Investment Income Dec. 15, 2021 Cash Investment in Stock Dec 31, 2021 Investment in Stock Investment Income Dr. 80,000 0 12,000 0 0 x 0 12,000 > Cr. 0 80,000 0 12,000 0 OX 0 12,000 0 > > > > 0 > > 0 X > 0 OX Check Journal Entries Financial Statement Presentation b. Show how the long-term investments in equity securities and the related investment income would be reported on the balance sheet and income statement of Rae Company at the end of each year. 2020 OX 2020 Ox Balance Sheet, Dec. 31 Assets Investment in Stock Income Statement Other gains or losses Investment Income Balance Sheet, Dec. 31 Assets Investment in Stock Income Statement Other gains or losses Investment Income 2021 . 0x 2021 Check