Justice Corporation Paid $40,000 Cash for an 80% Interest in the Voting

Justice Corporation paid $40,000 cash for an 80% interest in the voting common stock of Grace Corporation on July 1,2014,when Grace's stockholders' equity consisted of $30,000 of $10 par common stock and $15,000 retained earnings.The excess cost over the book value of the investment was assigned $2,000 to undervalued inventory items that were sold in 2014,with the remaining excess being assigned to goodwill.During the last half of 2014,Grace reported $4,000 net income and declared dividends of $2,000,and Justice reported income from Grace of $1,200.
There were no intercompany sales during the last half of 2014,but during 2015 Justice sold inventory items that cost $8,000 to Grace for $12,000.Half of these inventory items were included in Grace Corporation's Inventory at December 31,2015,with $1,000 unpaid by Grace at December 31,2015.
On January 5,2015,Justice sold a plant asset with a book value of $2,500 and a remaining useful life of 5 years to Grace for $4,000.Grace Corporation owned the plant asset at year-end.The plant asset has no salvage value and both companies use the straight-line depreciation method.
Justice Corporation uses the equity method to account for its investment in Grace,and the changes in Justice's Investment in Grace account from acquisition until year-end 2015 are as follows:
$\begin{array}{l}\text { Investment in Grace, July 1, } 2014&\$40,000 \\\text { Income from Grace July } 1 \text { - December 31, } 2014&1,200 \\\text { Less: Share of dividends received } &(1,600)\\\text { Investment in Grace at December } 31,2014 & 39,600 \\\text { Add: Income from Grace for } 2015 & 4,800 \\\text { Less: Dividends received } & \underline{(3,200)} \\\text { Investment in Grace at December } 31.2015 & \$ 41.200 \end{array}$ Required:
Complete the working papers for the year ending December 31,2015 that are given below.