Tyler Manufacturing purchased 60 percent of the ownership of Brown Corporation stock on January 1, 20X1, at underlying book value. Tyler also purchased \(\$ 50,000\) of Brown Corporation bonds at par value on December 31, 20X3. The bonds were sold by Brown Corporation on January 1,20X1, at 120 and have a stated interest rate of 12 percent. Interest is paid semiannually on June 30 and December 31 .

On December 31, 20X1, Brown sold to Tyler for \(\$ 30,000\) a building with a remaining life of 15 years. The building was purchased by Brown 10 years earlier for \(\$ 40,000\) and is being charged to operating expense on a 25 -year expected life.

Trial balances for the two companies on December 31, 20X3, are as follows:

\section*{Required}

a. Prepare a consolidation workpaper for 20X3, in good form.

b. Prepare a consolidated balance sheet, income statement, and statement of changes in retained earnings for \(20 \mathrm{X} 3\).

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Tyler Manufacturing Brown Corporation Cash Item Debit Credit Debit Credit $ 68,000 $ 55.000 Accounts Receivable 100.000 Inventory 120,000 75.000 110,000 Investment in Brown Bonds 50.000 Investment in Brown Stock 102.000 Depreciable Assets (net) 360,000 210,000 Interest Expense 20.000 20.000 Operating Expenses Dividends Declared Accounts Payable Bonds Payable Bond Premium 302,200 150,000 40,000 10.000 $ 94.200 $ 52,000 200.000 200.000 28,000 Common Stock Retained Earnings Sales 300,000 100.000 150,000 50.000 400,000 200.000 Income from Subsidiary 18.000 Total $1,162.200 $1.162.200 $630.000 $630.000