Winston Corporation purchased 40 percent of the stock of Fullbright Company on January 1, 20X2, at underlying book value. The companies reported the following operating results and dividend payments during the first three years of intercorporate ownership:

Required
Compute the net income reported by Winston for each of the three years, assuming it accounts for its investment in Fullbright using
(a) The cost method and
(b) The equitymethod.

Transcribed Image Text:

Wins Operating Income $100,000 250,000 ton Corporation Fullbright Company Year Dividends Net Income Dividends 20X2 20X3 20X4 40,000 80,000 120,000 $70,000 40,000 25,000 $30,000 60,000 50,000 60,000