Plain Ltd. acquired 80% of the voting shares of Stylish Ltd. on January 1, 20X3, for $1,200,000. The financial statement of Stylish Ltd. on the date of acquisition was as follows:

The inventory will be sold and the accounts receivable collected within 20X3, and the depreciable capital assets will be depreciated over 10 years, straight line, with no salvage value.

During 20X3, Stylish Ltd. sold inventory to Plain Ltd. for $180,000, with a 20% gross profit on the sale price. At the end of 20X3, $30,000 (at sale price) of these goods were still in the inventory of Plain Ltd. Plain Ltd. sold goods at $200,000 to Stylish Ltd. during 20X3, with a 30% gross profit on the sale price, and $50,000 (at sale price) of these goods were still in inventory at the end of 20X3. All of these goods remaining in inventory were sold during 20X4.

During 20X4, Plain Ltd. sold $150,000 of goods to Stylish Ltd., with a 25% gross profit on sale price, and $50,000 (at sale price) of these goods were in inventory at the end of 20X4. In addition, Stylish Ltd. sold goods to Plain Ltd. for $250,000, with a 20% gross profit on sale price, and $100,000 (at sale price) of these goods were still in inventory at the end of 20X4.

While Plain paid dividends of $20,000 in 20X3, Stylish paid $15,000; similarly, while Plain paid dividends of $25,000 in 20X4, Stylish paid $20,000.

The retained earnings balance of Plain on January 1, 20X3, was $1,650,000.

The following are the financial statements of the two companies at December 31, 20X4:

Required
Calculate the following under the entity method, considering all dates carefully:

a. Equity in the earnings of Stylish using the equity method for 20X3;

b. The adjusted earnings of Plain for 20X3;

c. Consolidated net income for 20X4;

d. Consolidated retained earnings balance at the end of 20X4;

e. NCI balance at the end of 20X4; and

f. Investment in Stylish account balance at the end of 20X3 under the equity method.

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Stylish Ltd. Statement of Financial Position January 1, 20X3 Carrying value $ 50,000 Fair market value $ 50,000 Cash Accounts receivable 115,000 300,000 300,000 140,000 Inventory 280,000 Land 420,000 Depreciable capital assets Accumulated depreciation 580,000 500,000 (120,000) $1,225,000 Total Current liabilities 275,000 250,000 Common shares 450,000 Retained earnings 500,000 $1,225,000 Total Statements of Financial Position December 31, 20X4 Stylish Ltd. $ 80,000 Plain Ltd. Cash $ 53,000 Accounts receivable 150,000 251,000 Inventory 420,000 350,000 Land 680,000 385,000 Depreciable capital assets 1,200,000 580,000 Accumulated depreciation (300,000) (236,000) Investment in Stylish Ltd. Total 1,200,000 $3,403,000 $ 250,000 $1,410,000 $ 180,000 Current liabilities Common shares 1,160,000 450,000 1,993,000 $3,403,000 Retained earnings 780,000 Total $1,410,000 Statements of Comprehensive Income Year Ended December 31, 20X4 Plain Ltd. $ 96,000 Stylish Ltd. $ 900,000 Sales Cost of goods sold 640,000 550,000 Depreciation 120,000 58,000 Other expenses 130,000 162,000 Total expenses 890,000 770,000 Net income 106,000 130,000