(c) If Blake wants to show the lowest debt-to-equity ratio at the end of Year 6. woulu Il pic to equity method to report its investment in Stergis? Briefly explain. Problem 2-4 HWI Ol LO3,5 Pender Corp. paid $285,000 for a 30% interest in Saltspring Limited on January 1, Year 6. During Year 6, Salts paid dividends of $110,000 and reported profit as follows: Profit before discontinued operations Discontinued operations loss (net of tax) Profit $339,000 (33,000) $306,000 CHAPTER 2 Investments in Equity Securi Pender's profit for Year 6 is calculated a s an ales, expenses of $152.000, and its investment income from Saltsprine, Beth companies have an in les expenses of S110,000, income tax expense of les have an income tax rate of 407 - 25 Required (a) Assume that Pender reports its investment using the equity method (0) Prepare all journal entries ary to account for Pender's investment for year (ii) Determine the correct balance in Pender's investment account at December (HD) Prepare an income statement for Pender for Year 6. (bi Assume that Pender uses the cost method. (i) Prepare all jurnal entries necessary to account for Pender's investment for Year (ii) Determine the correct balance in Pender's investment account at December 31. Year () Prepare an income statement for Pender for Year 6. (e) Which reporting method would Pender want to use if its bias is to report the highest possion investment to users of its financial statements? Briefly explain and show supporting calculations