Pender Corp. paid $255,000 for a 30% interest in Saltspring Limited on January 1, Year 6. During Year 6, Saltspring paid dividends of $104,000 and reported profit as follows

Penders profit for Year 6 is calculated on $936,000 in sales, expenses of $104,000, income tax expense of $332,800, and its investment income from Saltspring. Both companies have an income tax rate of 40%.

Required:

(a) Assume that Pender reports its investment using the equity method.

(i) Prepare all journal entries necessary to account for Penders investment for Year 6. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Record 30% investment in Saltspring.

Record dividends received.

Record 30% of Saltspring's profit and discontinued operations.

(ii) Determine the correct balance in Penders investment account at December 31, Year 6. (Omit $ sign in your response.)

Balance in Penders investment account $

(iii) Prepare an income statement for Pender for Year 6. (Negative amounts and deductibles should be indicated by a minus sign. Omit $ sign in your response.)

Pender Corp Income statement Year ended December 31, Year 6(Click to select) Income before income tax Operating expenses Sales Comprehensive income Net income before discontinued operations Income tax expense Disc. Operations - Equity method loss$(Click to select) Equity method income Disc. Operations - Equity method loss Comprehensive income Operating expenses Net income before discontinued operations Income before income tax Income tax expense Sales(Click to select) Net income before discontinued operations Income tax expense Income before income tax Comprehensive income Operating expenses Equity method income Sales Disc. Operations - Equity method lossIncome before income tax(Click to select) Income before income tax Income tax expense Sales Equity method income Operating expenses Net income before discontinued operations Disc. Operations - Equity method loss Comprehensive incomeNet income before discontinued operations(Click to select) Disc. Operations - Equity method loss Net income before discontinued operations Sales Equity method income Operating expenses Income before income tax Income tax expense Comprehensive income(Click to select) Loss Profit

(b) Assume that Pender uses the cost method.

(i) Prepare all journal entries necessary to account for Penders investment for Year 6.(If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Record 30% investment in Saltspring.

Record dividends received.

Record 30% of Saltspring's profit and discontinued operations.

ii) Determine the correct balance in Penders investment account at December 31, Year 6. (Omit $ sign in your response.)

Balance in Penders investment account $

(iii) Prepare an income statement for Pender for Year 6. (Negative amounts and deductibles should be indicated by a minus sign. Omit $ sign in your response.)

Pender Corp Income statement Year ended December 31, Year 6(Click to select) Equity method income Net income before discontinued operations Sales Income before income tax Comprehensive income Income tax expense Disc. Operations - Equity method loss Operating expenses$(Click to select) Income tax expense Dividend income Comprehensive income Net income before discontinued operations Income before income tax Operating expenses Disc. Operations - Equity method loss Sales(Click to select) Comprehensive income Net income before discontinued operations Sales Disc. Operations - Equity method loss Income tax expense Income before income tax Equity method income Operating expensesIncome before income tax(Click to select) Income before income tax Income tax expense Sales Equity method income Operating expenses Net income before discontinued operations Disc. Operations - Equity method loss Comprehensive income(Click to select) Profit Loss$Profit before discontinued operations$309,000Discontinued operations loss (net of tax)(31,200)Profi$277,800