Pierce Company acquired a 90% interest in Sanders Company on January 1, 2011, for $1,480,000. At this time, Sanders Company’s common stock and retained earnings balances were $1,000,000 and $500,000, respectively. An examination of the books of Sanders on the date of purchase revealed the following:

In 2012, Sanders Company’s equipment has a remaining life of 10 years. Eighty percent of the in-ventory was sold in 2011, the remainder in 2012.
During 2011, Pierce Company sold merchandise costing $400,000 to Sanders at a 25% markup on cost, and Sanders sold merchandise to Pierce Company for $100,000 (this price included $25,000 in profit). In 2012, Pierce Company sold merchandise to Sanders Company for $350,000, while Sanders Company sold merchandise to Pierce Company for $80,000. The 2011 markup percentages were also used on the 2012 sales. The selling price of intercompany merchandise remaining in ending inventories for both years is summarized here:

In 2012, Sanders Company also sold a piece of land that had a book value of $250,000 to Pierce Company for $300,000. On December 31, 2012, Pierce Company holds a $60,000 receivable on the merchandise it sold to Sanders Company.

Required:
Prepare a consolidated statements workpaper for the year ended December 31,2012.

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Book Value Fair Value Current Assets Marketable Securities Inventory Plant and Equipment (net) Land $300,000 200,000 175,000 650,000 500,000 $300,000 200,000 225,000 800,000 600,000 Merchandise from Intercompany Sales in Ending Inventory of 2011 2012 Pierce Company Sanders Company $40,000 50,000 $20,000 30,000 Pierce Sanders 200,000 300,000 100,000 300,000 1,480,000 400,000 1,000,000 600,000 60,000 400,000 120,000 $4,960,000 as Accounts Receivable Marketable Securities 150,000 250,000 200,000 250,000 Inventory 12/31 Investment in Sanders Company Plant and Equipment (net) Depreciation Expense 350,000 800,000 400,000 40,000 260,000 70,000 $2,770,000 Land Cost of Goods Sold Other Expenses Dividends Declared Total S 241,000 140,000 100,000 1,000,000 580,000 900,000 50,000 Accounts Payabl 350,000 1,900,000 706,000 1,700,000 Notes Payable Common Stock 1/1 Retained Earmings Sales Gain on Sale of Land Dividend Income 63,000 $4,960.000 Total 2,770,000