Exercise 4 (LO 2) Equity method, second year, eliminations, statements. The trial balances of Pepper and Salt companies of Exercise 3 for December 31, 20X2, are presented as follows:

Pepper Salt Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152,000 115,000 Depreciable Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000 200,000 Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (130,000) (40,000)

Investment in Salt Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270,000 Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (80,000)

Common Stock ($10 par) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (300,000) (100,000)

Retained Earnings, January 1, 20X2 . . . . . . . . . . . . . . . . . . . . . . . . (260,000) (170,000)

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (200,000) (100,000)

Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,000 85,000 Subsidiary Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,000)

Dividends Declared . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0