AWhat Would Be Company P's Investment Balance Given the Following

Essay

a.What would be Company P's investment balance given the following information:
Company P's ownership interest of Company S is 90%.The original cost of the investment is $500,000.The beginning retained earnings of Company S in prior to a dividend was $100,000 and two years later retained earnings of Company S was $280,000.
b.Record the journal entry to record equity income under the simple equity method at the end of two years for Company P, assuming the second year's income for Company S was $100,000 and no dividend declarations were made.