#4

On January 1, 20X0, Pepper Corporation Issued 9,000 of its $10 par value shares to acquire 45 percent of the shares of Salt Manufacturing. Salt Manufacturing's balance sheet immediately before the acquisition contained the following items: On the date of the stock acqulsition, Pepper's shares were selling at $35, and Salt Manufacturing's bulldings and equipment had a remaining economic life of 5 years. The amount of the differential assigned to goodwill is not impaired. In the two years following the stock acquisition, Salt Manufacturing reported net income of $88,000 and $58,000 and paid dividends of $29,000 and $48,000, respectively. Pepper used the equity method in accounting for its ownership of Salt Manufacturing. Required: a. Prepare the entry recorded by Pepper Corporation at the time of acquisition. Note: If no entry is required for a transaction/event, select "No Journal entry required" in the first account fleld. b-1. Prepare the journal entries recorded by Pepper during 20 Xo related to its investment in Salt Manufactur Note: If no entry Is required for a transactlon/event, select "No journal entry required" In the first account A Record the acquisition of Salt Manufacturing. B Record the dividends received from Salt Manufacturing. c Record the equity-method income for period. D Record the entry to amortize the differential assigned to buildings and equipment. Note : = journal entry has been entered