Parsons Company acquired 90% of the outstanding common stock of Shea Company on June 30, 2011, for $426,000. On that date, Shea Company had retained earnings in the amount of $60,000, and the fair value of its recorded assets and liabilities was equal to their book value. The excess of implied over the fair value of the recorded net assets was attributed to an un- recorded manufacturing formula held by Shea Company, which had an expected remaining useful life of five years from June 30, 2011. Financial data for 2013 are presented here:

On December 31, 2011, Parsons Company sold equipment (with an original cost of $100,000 and accumulated depreciation of $50,000) to Shea Company for $97,500. This equipment has since been depreciated at an annual rate of 20% of the purchase price. During 2012 Shea Company sold land to Parsons Company at a profit of $15,000. The inventory of Parsons Company on December 31, 2012, included goods purchased from Shea Company on which Shea Company recognized a profit of $7,500. During 2013, Shea Company sold goods to Parsons Company for $375,000, of which $60,000 was unpaid on December 31, 2013. The December 31, 2013, inventory of Parsons Company included goods acquired from Shea Company on which Shea Company recognized a profit of $10,500.

Required:
A. Prepare a consolidated financial statements workpaper for the year ended December 31,
2013.
B. Prepare a schedule to calculate consolidated retained earnings on December 31, 2013, using an analytical or t-account approach. (Hint: Due to rounding, you may be out of balance by $1. To avoid this, you should carry decimals until the finalcalculation.)

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Parsons Company Shea Compro Sales Dividend Income Total Revenue Cost of Goods Sold Expenses 2,555,500 54,000 2,609,500 1,730,000 654,500 2,384,500 225,000 $1,120,000 1,120,000 690,500 251,000 941,500 178,500 Total Cost and Expense Net Income 1/1 Retained Earnings Net Income Dividends Declared 12/31 Retained Earnings 595,000 225,000 (100,000) 720,000 139,500 178,500 (60,000) $ 258,000 132,500 125,000 201,000 13,000 Cash Accounts Receivable Inyentory Other Current Assets Land Investment in Shea Company Property and Equipment Accumulated Depreciation 119,500 342,000 362,000 40,500 150,000 426,000 825,000 207,000) $2,058,000 241,000 53,500) 659,000 Total Assets Accounts Payable Other Liabilities Capital Stock Additional Paid-in Capital Retained Earnings $295,000 43,000 1,000,000 32,000 19,000 300,000 50,000 258,000 659,000 720,000 2,058,000 Total Liabilities and Equity