Wealthy Manufacturing Company purchased 40% of the voting shares of Diversified Products Corporation on March 23, 20X4. On December 31, 20X8, Wealthy Manufacturing's controller attempted to prepare income statements and retained earning statements for the two companies using the following summarized 20X8 data:

P2-26A Equity-Method Income Statement LO 2-3, 2-6 Wealthy Manufacturing Company purchased 40 percent of the voting shares of Diversified Products Corporation on March 23, 20X4. On December 31, 20X8, Wealthy Manufacturing's controller attempted to prepare income statements and retained earnings statements for the two companies using the following summarized 20X8 data: Wealthy Manufacturing Diversified Products Net Sales $850,000 $400,000 Cost of Goods Sold 670,000 320,000 Other Expenses 90,000 25,000 Dividends Declared & Paid 30,000 10,000 Retained Earnings, 1/1/X8 420,000 260,000 Wealthy Manufacturing uses the equity method in accounting for its investment in Diversified Products. The controller was also aware of the following specific transactions for Diversified Products in 20X8, which were not included in the preceding data: 1. Diversified sold its entire Health Technologies division on September 30, 20X8, for $375,000. The book value of Health Technologies division's net assets on that date was $331,000. The division incurred an operating loss of $15,000 in the first nine months of 20X8. 2. During 20X8, Diversified sold one of its delivery trucks after it was involved in an accident and recorded a gain of $10,000