On January 1, 20X0, Pepper Corporation issued 8,000 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:

SALT MANUFACTURING Balance Sheet January 1, 20X0
	Book Value					Fair Value
Assets
Cash and Receivables		$	46,000				$	46,000
Land			85,000					95,000
Buildings and Equipment (net)			137,000					167,000
Patent			95,000					95,000
Total Assets			363,000
Liabilities & Equities
Accounts Payable		$	159,000					159,000
Common Stock			147,000
Retained Earnings			57,000
Total Liabilities & Equities		$	363,000

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 10 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 $85,000 and $55,000 and paid dividends of $26,000 and $45,000, 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.)

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.)

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.)

c. What balance will be reported in Peppers investment account on December 31, 20X1?