On January 1, 20X1, Company P Purchased a 90% Interest

Essay

On January 1, 20X1, Company P purchased a 90% interest in Company S for $360,000. Company P prepared the following determination and distribution of excess schedule at that time:
Company S had income of $30,000 for 20X1 and $40,000 for 20X2. No dividends were paid. Company P sold its entire investment in Company S on January 1, 20X3, for $340,000.
Required:
Prepare Company P's entries to record the sale assuming that Company P used the
a.
simple equity method to reflect its investment in Company S.
b.
cost method to reflect its investment in Company S.