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Year 20X6 20X7 20X8 20X9 Operating Income Ravine Corporation 140,000 80,000 220,000 160,000 Net Income Valley Industries 30,000 50,000 10,000 40,000
E2-6 Ravine Corporation purchased 30 percent ownership of Valley Industries for $90,000 on January 1, 20X6, when Valley had capital stock of $240,000 and retained earnings of $60,000. The following data were reported by the companies for the years 20X6 through 20X9:a. What net income would Ravine Corporation have reported for each of the years, assuming Ravine accounts for the intercorporate investment using (1) the cost method and (2) the equity method?b. Give all appropriate journal entries for 20X8 that Ravine made under both the cost and the equity methods.Spreadsheet attached
