Empire Co. Ltd. is a chain of grocery outlets. Empire owns 100% of Foodland Ltd., a competing chain that Empire established to serve a different market segment. To obtain the best deal from suppliers, Empire buys most of the materials and products for both chains and resells to Foodland whatever that chain needs.

During 20X6, Empire sold materials costing $2,000,000 to Foodland at cost. At the end of the year, Foodland still owed Empire $250,000 for purchases of the materials.

Empire records its investment in Foodland on the equity basis. During 20X6, Foodland declared and paid dividends totaling $200,000. Empire has not yet recorded its equity in the earnings of Foodland for 20X6. The pre-consolidation trial balances for the two companies are shown below.

Trial Balances Dr (Cr) Empire Class Cash S 400,000 50,000 Accounts receivable 300,000 150,000 Inventory 1,200,000 600,000 Fixtures and equipment (net) 5,000,000 1,400,000 Investment in Class Glass Ltd. 2,100,000 Other investments 500,000 Accounts payable (700,000) (500,000) Common shares (1,600,000) (1,000,000) Retained earnings (5,700,000) (1,300,000) Dividends paid 600,000 200,000 Sales (16,000,000) (7,100,000) Cost of goods sold 11,000,000 5,000,000 Other operating expenses 3,000,000 2,500,000 Dividend and interest income (100,000) Total S