EXEK CISE 3 Equity method, first year, eliminations, statements. Pepper Company purchased an 80% interest in Salt Company for $250,000 in cash on January 1 20X1, when Salt Company had the following balance sheet: Assets Liabilities and E $100,000 Current liabilities 50,000 100,000 150,000 $300,000 Current assets Depreciable fixed assets. Common stock ($10 par) Retained earnings 200,000 Total assets... $300,000 Total liabilities and equity .. Any excess of the price paid over book value is attributable only to the fixed assets, which a 10-year remaining life. Pepper Company uses the simple equity method to record its estment in Salt Company The following trial balances of the two companies were prepared on December 31, 20X1 Pe Salt t Assets 130,000 200,000 (106,000 (20,000) 60,000 400,000 Depreciable Fixed Assets umulated Depreciation .. stment in Salt Company .. 266,000 urrent Liabilities 60,000 40,000) 300,000 100,000) 200,000 50,000) 50,000 100,000) 75,000 n Stock ($10 par) . Retained Earnings, January 1, 20X1. . Sales Expenses Subsidiary Income Dividends Declared 110,000 (20,000 5,000 1. Prepare a determination and distribution of excess schedule for the investment. 2. Prepare all the eliminations and adjustments that would be made on the 20X1 consolidated worksheet 3. Prepare the 20X1 consolidated income statement and its related income distribution schedules. 4. Prepare the 20X1 consolidated balance sheet