Shown below are selected ledger accounts from the trial balance of a parent and its subsidiary as of December 31, Year 10. P Co. Investment in bonds of P $ S Co. $ 37,400 Investment in shares of S (equity method) Sales 153,899 672,000 Interest income 396,000 2,250 Equity method income 120,213 Gain on sale of land 4,500 Common shares 300,000 100,000 Retained earnings, beginning of year 73,000 43,000 Bonds payable 8% 197,000 Cost of sales 403,200 237,600 Interest expense 17,500 Selling and administrative expense 43,000 21,500 Income tax expense 20,000 9,440 Dividends 10,000 8,000 Additional Information: P Company purchased its 90% interest in S Company in Year 2, on the date that S Company was incorporated, and has followed the equity method to account for its investment since that date. On April 1. Year 6. land that had originally cost $18,500 was sold by S Company to P Company for $23,000. P purchased the land with the intention of developing it, but in Year 10 it decided that the location was not suitable and the land was sold to a chain of drug stores. On January 1, Year 3, P Company issued $200,000 face value bonds due in 10 years. The proceeds from the bond issue amounted to $185,000. On July 1, Year 10, S Company purchased $40,000 of these bonds on the open market at a cost of $36,750. Intercompany bondholding gains (losses) are allocated between the two affiliates. S Company had $66,000 in sales to P Company during Year 10. Use income tax allocation at a 40% tax rate.