Compute equity method income from the Joint Venture for 2020

Question 2 (30 points) Turner and Clark Inc, both Canadian private companies, formed a joint venture on January 1, 2020 called Clar-Turn Inc. Turner and Clark each hold a 50% in the venture and share equally in any profits or losses arising from the venture. The following statements were prepared on December 31, 2020. Balance Sheets Current Assets Investment in Clar-Turn Turner $53,333 $28,667 Clar-Turn $26,667 SO Fixed Assets Accumulated Depreciation $268,667 $100,00 $108,667 -$13,333 Other Assets Total Assets Current Liabilities Long-Term Debt Common Shares Retained Earnings, Jan 1 $86,667 $306,667 $45,3331 $28,667 $120,000 $74,667 $80,000 $200,000 $93,333 $40,000 $53,333 SO Net Income for the year $40,000 $13,333 Liabilities and Equity $308,667 $200,000 Other Information: During 2020, Clar-Turn purchased $13,333 of inventory from Turner. Turner recorded a gross profit of $2,667 on these sales. On December 31, 2020, Clar-Turn's inventory contained half of the merchandise purchased from Turner Turner initially recorded its Investment in Clar-Turn using the cost method. Turner plans to adjust its year-end statements to account for the Clar-Turn joint venture using the equity method An income tax allocation rate of 20% applies. PART A: Required: a) Compute equity method income from the joint venture for 2020