On January 1, 20X7, Pepper Company acquired 90 percent of the outstanding common stock of Salt Corporation for $1,242,000. On that date, the fair value of noncontrolling interest was equal to $138,000. The entire differential was related to land held by Salt. At the date of acquisition, Salt had common stock outstanding of $520,000, additional paid-in capital of $200,000, and retained earnings of $540,000. During 20X7, Salt sold inventory to Pepper for $440,000. The inventory originally cost Salt $360,000. By year-end, 30 percent was still in Pepper's ending inventory. During 20X8, the remaining inventory was resold to an unrelated customer. Both Pepper and Salt use perpetual in ventory systems. Income and dividend information for both Pepper and Salt for 20X7 and 20X8 are as follows:

Pepper Company Salt Corp.

Operating Income Dividends Net Income Dividends

20X7 $ 860,000 $ 160,000 $ 360,000 $ 200,000

20X8 $910,000 $200000 $420,000 $200,000 .

Assume Pepper uses the fully adjusted equity method to account for its investment in Salt. Required: Present the consolidation entries necessary to prepare consolidated financial statements for 20X8.