Packer Company purchased, as a long-term investment, some of the 200.000 shares of the outstanding common stock of Boston Corporation. The annual accounting period for each company ends December 31. The following transactions occurred during 2005:

Jan. 10 Purchased shares of common stock of Boston at $15 per share as follows:

Case A—30,000 shares.

Case B—80,000 shares.

Dec. 3 1 Received the 2005 financial statements of Boston Corporation; the reported net income was $90,000.

31 Received a cash dividend of $0.60 per share from Boston Corporation.

3 1 Determined that the current market price of Boston stock was $9 per share.

Required: 1. For each case, identify the accounting method that the company should use. Explain why. 2. Give the journal entries for each case for these transactions. If no entry is required, explain why.

(Hint: Use parallel columns for Case A and Case B.) 3. Give the amounts for each case that should be reported on the 2005 financial statements. Use the following format:

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Case A Case B Balance sheet (partial) Investments Investments in common stock, Boston Corporation Stockholders' equity Net unrealized gain or loss Income statement (partial) Investment income Equity in earnings of investee