Significant Influence Investment - Prepare all calculations.

On January 1, 2020, Joy Inc. paid $900,000 to purchase 30% of Happy Inc's outstanding voting shares. Joy Inc. has significant influence over Happy Inc. Assume that Joy Inc. is using the EQUITY method of accounting for this investment of significant influence. The following took place in 2020:

• Happys earnings for 2020 were $150,000, which included $20,000 (in profits) that resulted from sales of inventory from Joy.
• Happy has not yet used the inventory purchased from Joy. They will process it next year and the resulting product will be sold to one of Happys key customers.
• Happy declared and paid dividends in the amount of $40,000 during 2020.

Required:

a) What should be reported as investment in Happy Inc. on Joys balance sheet as of December 31, 2020?

b) prepare all the necessary journal entries for Joy for 2020.