The following financial statements were prepared on December $31,$ Year $6.$

BALANCE SHEET

Pearl Silver

Cash $ $390,000$ $ $190,000$

Accounts receivable $290,000$

Inventory $2,450,000510,000$

Plant and equipment $3,450,0003,590,000$

Accumulated depreciation $(840,000)(400,000)$

Investment in Silver Company$$at cost $3,300,000$

$$9,040,000$ $$3,890,000$

Liabilities $ $737,000$ $ $543,000$

Common shares $3,750,0002,050,000$

Retained earnings $4,553,0001,297,000$

$$9,040,000$ $$3,890,000$

INCOME STATEMENT

Sales $$4,450,000$ $$1,450,000$

Dividend income $232,000$

$4,682,0001,450,000$

Cost of sales $2,590,000490,000$

Miscellaneous expenses $365,00079,000$

Administrative expense $89,00019,000$

Income tax expense $295,000165,000$

$3,339,000753,000$

Net income $$1,343,000$ $ $697,000$

RETAINED EARNINGS STATEMENT

Balance, January $1$ $$3,800,000$ $ $890,000$

Net income $1,343,000697,000$

$5,143,0001,587,000$

Dividends $590,000290,000$

Balance, December $31$ $$4,553,000$ $$1,297,000$

Additional Information

Pearl purchased $80\%$ of the outstanding voting shares of Silver for $$3,300,000$ on July $1,$ Year $2,$

at which time Silver$$s retained earnings were $$445,000,$ and accumulated depreciation was $$69,000.$

The acquisition differential on this date was allocated as follows:

$20\%$ to undervalued inventory

$40\%$ to equipment$$remaining useful life eight years

$$ Balance to goodwill

During Year $3,$ a goodwill impairment loss of $$79,000$ was recognized, and an impair ment test conducted as at December $31,$ Year $6,$ indicated that a further loss of $$29,000$ had

occurred.

Amortization expense is grouped with cost of goods sold and impairment losses are grouped

with administrative expenses.

Silver owes Pearl $$84,000$ on December $31,$ Year $6$

How did they get the numbers in this entry? Show me how they calculated each one. Dr R$/$E$,$ Jan $1-$ Silver $$890,000$ Dr Common Shares $-$ Silver $2,050,000$ Dr Acquisition differential $$939,750$ Cr Investment in Silver $$3,879,750$