Pruitt Corporation owns 90% of the common stock of Sedbrook Company. The stock was purchased for $625,500 on January 1, 2022, when Sedbrook Company’s retained earnings were $95,000. Preclosing trial balances for the two companies at December 31, 2026, are presented here:

The January 1, 2026, inventory of Sedbrook Company includes $25,000 of profit recorded by Pruitt Corporation on 2025 sales. During 2026, Pruitt Corporation made intercompany sales of $250,000 with a markup of 20% on cost. The ending inventory of Sedbrook Company includes goods purchased in 2026 from Pruitt for $60,000.

Required:
A. Prepare the consolidated statements workpaper for the year ended December 31, 2026.
B. Calculate consolidated retained earnings on December 31, 2026, using the analytical or t- account approach.

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Cash Accounts Receivable (net) Inventory 1/1 Investment in Sedbrook Co. Other Assets Dividends Declared Purchases Other Expenses Total Accounts Payable Other Liabilities Common Stock Retained Earnings (1/1) Sales Dividend Income Total Ending Inventory Pruitt Corporation $ 90,800 243,300 165,000 625,500 550,000 110,000 935,000 198,000 $2,917,600 $ 77,000 120,700 880,000 598,400 1,210,000 31,500 $2,917,600 $ 220,000 Sedbrook Company $ 96,000 135,000 132,000 480,000 35,000 420,000 165,000 $1,463,000 $ 36,000 47,000 600,000 144,000 636,000 $1,463,000 $ 144,000