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On January 1, 20X0, Pepper Corporation issued 7,000 of its $15 par value shares to acquire 45 percent of the shares of Salt Manufacturing. Salt
On January 1, 20X0, Pepper Corporation issued 7,000 of its $15 par value shares to acquire 45 percent of the shares of Salt Manufacturing. Salt Manufacturing's balance sheet immediately before the acquisition contained the following items: On the date of the stock acquisition, Pepper's shares were selling at $40, and Salt Manufacturing's buildings and equipment had a remaining economic life of 5 years. The amount of the differential assigned to goodwill is not impaired. In the two years following the stock acquisition, Salt Manufacturing reported net income of $86,000 and $56,000 and paid dividends of $26,000 and $46,000, respectively. Pepper used the equity method in accounting for its ownership of Salt Manufacturing. Required: a. Prepare the entry recorded by Pepper Corporation at the time of acquisition. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) \begin{tabular}{|c|c|c|c|} \hline Event & General Journal & Debit & Credit \\ \hline 1 & & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline \end{tabular} Record entry Clear entry View general journal b-1. Prepare the journal entries recorded by Pepper during 20X0 related to its investment in Salt Manufacturing. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) A Record the acquisition of Salt Manufacturing. X B Record the dividends received from Salt Manufacturing. C Record the equity-method income for period. D Record the entry to amortize the differential assigned to buildings and equipment. \begin{tabular}{|c|c|c|c|} \hline Event & General Journal & Debit & Credit \\ \hline 1 & & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline \end{tabular} Record entry Clear entry View general journal b-2. Prepare the journal entries recorded by Pepper during 20X1 related to its investment in Salt Manufacturing. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) A Record the dividends received from Salt Manufacturing. B Record the equity-method income for period. C Record the entry to amortize the differential assigned to buildings and equipment. Note: Enter debits before credits. What balance will be reported in Pepper's investment account on December 31,201
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