The following financial statements were prepared on December 31, Year 6. BALANCE SHEET Pearl Silver Cash $ 400,000 $ 200,000 Accounts receivable 300,000 Inventory 2,500,000 520,000 Plant and equipment 3,500,000 3,690,000 Accumulated depreciation (850,000 ) (410,000 ) Investment in Silver Company (at cost) 3,400,000 $ 9,250,000 $ 4,000,000 Liabilities $ 720,000 $ 570,000 Common shares 3,850,000 2,100,000 Retained earnings 4,680,000 1,330,000 $ 9,250,000 $ 4,000,000 INCOME STATEMENT Sales $ 4,500,000 $ 1,500,000 Dividend income 240,000 4,740,000 1,500,000 Cost of sales 2,600,000 500,000