Bennett Corporation owns 60 percent of the stock of Stone Container Company, which it acquired at book value in 20X1. At that date, the fair value of the noncontrolling interest was equal to 40 percent of Stone's book value. On December 31, 20X3, Bennett purchased $100,000 par value of Stone bonds. Stone originally issued the bonds at par value. The bonds' coupon rate is 9 percent. Interest is paid semiannually on June 30 and December 31. Trial balances for the two companies on December 31, 20X4, are as follows:

All interest income recognized by Bennett is related to its investment in Stone bonds. Assume Bennett uses the fully adjusted equity method.

Required

a. Prepare a consolidation worksheet for 20X4 in good form.

b. Prepare a consolidated balance sheet, income statement, and retained earnings statement for 20X4.

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Bennett Corporation Stone Container Company Debit Credit Debit Credit $ 20,000 80,000 110,000 250,000 Cash Accounts Receivable Inventory Other Assets Investment in Stone Container Bonds Investment in Stone Container Stock Interest Expense Other Expenses Dividends Declared Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Interest Income Income from Stone Container Co Total S61,600 100,000 120,000 340,000 106,000 122,400 20,000 $ 368,600 40,000 18,000 $182,000 10,000 $ 80,000 200,000 300,000 210,000 450,000 8,000 30,600 50,000 200,000 100,000 70,000 250,000 $1,278,600 $1,278,600 $670,000 $670,000