Pruitt Corporation owns 90% of the common stock of Sedbrook Company. The stock was purchased for $540,000 on January 1, 2009, when Sedbrook Company’s retained earnings were $100,000. Preclosing trial balances for the two companies at December 31, 2013, are presented here:

The January 1, 2013, inventory of Sedbrook Company includes $30,000 of profit recorded by Pruitt Corporation on 2012 sales. During 2013, Pruitt Corporation made inter-company sales of $200,000 with a markup of 25% on cost. The ending inventory of Sedbrook
Company includes goods purchased in 2013 from Pruitt for $50,000. Pruitt Corporation uses the partial equity method to record its investment in Sedbrook Company.

Required:
A. Prepare the consolidated statements workpaper for the year ended December 31, 2013.
B. Calculate consolidated retained earnings on December 31, 2013, using the analytical or t-accountapproach.

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Pruill Corporation Sedbrook Company Gash Accounts Receivable (net) Inventory 1/1 Inyestment in Sedbrook Co. Other Assets Diyidends Declared Purchases Other Expenses 83,000 213,000 150,000 578,250 500,000 100,000 850,000 180,000 2,654,250 80,000 112,500 110,000 400,000 30,000 350,000 137,500 1,220,000 Accounts Payable Other Liabilities Common Stock Retained Earnings Sales Equity in Subsidiary Income 70,000 75,000 800,000 562,000 1,100,000 47,250 2,654,250 30,000 40,000 500,000 120,000 530,000 $1,220,000 Ending Inventory 5 200,000 $ 120,000