Sal is a 90 percent-owned subsidiary of Pig Corporation, acquired at book value several years ago. Comparative separate-company income statements for the affiliates for 2011 are as follows:

On January 5, 2011, Pig sold a building with a 10-year remaining useful life to Sal at a gain of $30,000. Sal paid dividends of $100,000 during 2011.REQUIRED1. Reconstruct the journal entries made by Pig during 2011 to account for its investment in Sal. Explanations of the journal entries are required.2. Prepare a consolidated income statement for Pig Corporation and Subsidiary for2011.

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Pig Corporation Sal Corporation $700,000 Sales Income from Sal Gain on building Income credits $1,500,000 108,000 30.000 1.638,000 1,000,000 300,000 1,300,000 $ 338,000 700,000 400,000 Cost of sales Operating expenses Income debits 150,000 550,000 Net income $150.000