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: 
9 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: Fair Value 5 points Skipped SALT MANUFACTURING Balance Sheet January 1, 20X0 Book Value Assets Cash and Receivables $ 38,000 Land 83,000 Buildings and Equipment (net) 136,000 Patent 93,000 Total Assets 350,000 Liabilities & Equities Accounts Payable $168,000 Common Stock 136,000 Retained Earnings 46,000 Total Liabilities & Equities $350,000 $ 38,000 93,000 166,000 93,000 168,000 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 $86,000 and $56,000 and paid dividends of $24,000 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.) In the two years following the stock acquisition, Salt Manufacturing reported net income of $86,000 and $56,000 and paid dividends of $24,000 and $46,000, respectively. Pepper used the equity method in accounting for its ownership of Salt Manufacturing. 9 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.) 5 points View transaction list Skipped Journal entry worksheet Record the acquisition of Salt Manufacturing. Note: Enter debits before credits. Event General Journal Debit Credit 1 Record entry Clear entry View general journal 9 5 points 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.) Skipped View transaction list Journal entry worksheet Record the acquisition of Salt Manufacturing. Note: Enter debits before credits. Event General Journal Debit Credit 1 Record entry Clear entry View general journal 9 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.) 5 points Skipped View transaction list Journal entry worksheet Record the dividends received from Salt Manufacturing. Note: Enter debits before credits. General Journal Debit Credit Event 1 Record entry Clear entry View general journal c. What balance will be reported in Pepper's investment account on December 31, 20X1? Investment account balance
