Sparkle Sparkle, Inc. purchased 40,000 shares of Big Energy Corporation on January 1, 2019 for $20 per share. Big Energy Corporation declared and paid a cash dividend of $0.60 per share in 2019 and $0.70 per share in 2020. Sparkle Sparkle, Inc. obtained the financial statements of Big Energy Corporation, and determined their share of reported net income was $40,000 and $48,000 for 2019 and 2020, respectively. The market price of Big Energy Corporations stock was $14 per share and $16 per share on 12/31/2019 and 12/31/2020, respectively.

Required:

1. Prepare all journal entries for the above transactions, assuming Sparkle Sparkle, Inc. has significant influence over the operations of Big Energy Corporation.
2. Prepare all journal entries for the above transactions, assuming Sparkle Sparkle, Inc. does not have significant influence over the operations of Big Energy Corporation and (a) the fair value is readily determinable, and (b) the fair value is NOT readily determinable.
3. Complete the following schedule. Indicate which method of accounting for investments should be used and show what would have been reported on the December 31, 2019 financial statements. Prepare the Statement of Cash Flows under both the direct and indirect method. (please show work so I can study how you came to your answers on the financial statements please!)

	Significant Influence	No Significant Influence	No Significant Influence
		Fair Value Determinable	Fair Value NOT Determinable
Method of Accounting:
Balance Sheet
Income Statement
Statement of Comprehensive Income
Statement of Cash Flows