On 1/1/X1, Palm Company acquired 70% of Saltillo's common stock for $700,000. At the time, Small Company had $500,000 of capital stock and $500,000 of retained earnings. During year X1, Saltillo sold 1,000 inventory units to Palm for $100,000 that had previously cost Saltillo $70,000. As of 12/31/X1, 800 of the units purchased from Saltillo remained in Palm's inventory. Saltillo reported a $200,000 income in year X1 and paid $20,000 of dividends. How much investment income should Pal recognize in year X2? $49,000 $53,200 $65,800 $70,000 O None of the Above 2021 McGraw-Hill Education All rights reserved