only need part b worksheet

Illustration #3 Pepper Company, which is a calendar-year-reporting company, purchased 100% of the common stock of Salt Inc. for $325,000 on 12/31/17. On the acquisition date, the following net assets of Salt had fair values different than book value: Cost FMV Inventory 80,000 75,000 Turnover 6 times per year Land 70,000 100,000 Building and equipment 220,000 210,000 10 year life Accumulated depreciation (60,000) Covenant-not-to-complete 40,000 4 year life Bonds payable 150,000 175,000 10 years to maturity Each company's financial statements for the year ended 12/31/17 immediately after the acquisition are as follows: Income Statement (2017) Sales Cost of sales Expenses Net Income Pepper Co. (900,000) 500,000 260,000 (140,000) Salt Co. (500,000) 250,000 202,000 (48,000) Balance Sheet (as of 12/31/17) Cash Accounts receivable Inventory Investment in Salt Land Buildings and equipment, net 20,000 70,000 80,000 45,000 75,000 105,000 325,000 100,000 200,000 (100,000) 750,000 70,000 220,000 (60,000) 400,000 Total Assets Payables and accruals Bonds payable Common stock Retained earnings Total Liab, and Equity (80,000) (20,000) (300,000) (350,000) (750,000) (60,000) (150,000) (100,000) (90,000) (400,000) Required: a. Present the journal entries made by Pepper during 2018 to reflect the equity method of accounting. b. Complete the "Illustration #3 worksheet to show the consolidation on 12/31/18. Pepper is using the equity method to account for their investment in Salt. istration #3 nsolidation Date 12/31/18 ome Statement (2018) Sales Consolidation Entries Debit Credit Salt Co. Consolidated (600,000) 300,000 Cost of sales Depreciation expense Interest expense Other expenses Equity income Pepper Co. (950,000) 520,000 30,000 7,000 338,000 (52,500) 22,000 15,000 203,000 Net Income (107,500) (60,000) atement of Retained Earnings Balances, beginning 1/1/18 Net income Dividends declared Balances, 12/ 31/18 (350,000) (107,500) 80,000 (377,500) (90,000) (60,000) 35,000 (115,000) alance Sheet (as of 12/31/18) Cash 35,000 60,000 120,000 Accounts receivable Inventory Investment in Salt Co. Land Buildings and equipment Accumulated depreciation Covenant-not-to-compete Goodwill Total Assets 70,000 95,000 115,000 342,500 100,000 150,000 (110,000) 70,000 220,000 (65,000) 762,500 440,000 Payables and accruals Bonds payable Common stock Retained earnings (65,000) (20,000) (300,000) (377,500) (75,000) (150,000) (100,000) (115,000) Total Liab, and Equity (762,500) (440,000)