Exercise 9-5 On January 2, 2014, Peoples, Inc. acquired an 80% interest in Schmidt Corporation for $900,000. Schmidt reported total stockholders' equity of $1,000,000 on this date. An examination of Schmidt's books revealed that book value was equal to fair value for all assets and liabilities except for inventory, which was undervalued by $60,400. All of the undervalued inventory was sold during 2014. Peoples also purchased 30% of the $600,000 par value outstanding bonds of Schmidt Corporation for $170,000 on January 2, 2014. The bonds mature in 10 years, carry an 12% annual interest rate payable on June 30 and December 31, and had a carrying value of $606,000 on the date of purchase. Both companies use the straightline method to amortize bond discounts and premiums. Peoples reported net income of $306,000 for 2014 and paid dividends of $131,000 during 2014. Schmidt Corporation reported net income of $336,000 for 2011 and paid dividends of $82,000 during the year Compute the following items at December 31, 2014