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On January $1,20$X$0,$ Pepper Corporation issued $9,000$ of its $$15$ par value shares to acquire $45$ percent of the shares of Salt Manufacturing. Salt Manufacturing$$s balance sheet immediately before the acquisition contained the following items:

SALT MANUFACTURINGBalance SheetJanuary $1,20$X$0$Book ValueFair ValueAssets$$Cash and Receivables$ $40,000$$ $40,000$Land$78,00088,000$Buildings and Equipment $($net$)136,000166,000$Patent$88,00088,000$Total Assets$342,000$Liabilities & Equities$$Accounts Payable$ $150,000150,000$Common Stock$141,000$Retained Earnings$51,000$Total Liabilities & Equities$ $342,000$

On the date of the stock acquisition, Pepper's shares were selling at $$40,$ and Salt Manufacturing$$s buildings and equipment had a remaining economic life of $5$ years. The amount of the differential assigned to goodwill is not impaired.

In the two years following the stock acquisition, Salt Manufacturing reported net income of $$83,000$ and $$53,000$ and paid dividends of $$27,000$ and $$43,000,$ respectively. Pepper used the equity method in accounting for its ownership of Salt Manufacturing.

Required:

a$.$ Prepare the entry recorded by Pepper Corporation at the time of acquisition.

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.

b$-1.$ Prepare the journal entries recorded by Pepper during $20$X$0$ related to its investment in Salt Manufacturing.

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.

b$-2.$ Prepare the journal entries recorded by Pepper during $20$X$1$ related to its investment in Salt Manufacturing.

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.

c$.$ What balance will be reported in Pepper's investment account on December $31,20$X$1?$

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