Trial balances for Phan Company and its subsidiary Sato Company on December 31, 2023, are as follows:

Sato Company issued 40,000 shares of stock on July 1, 2019, its date of incorporation. No other capital stock transactions were undertaken by Sato Company after that time. Phan Company acquired its investment in Sato Company through open- market purchases of stock as follows:

During 2022, because Phan only owns 9,000 of the 40,000 shares of Sato (or 22.5%), the investment is accounted for using the equity method (equity method is required for ownership levels between 20% and 50%). After control is obtained, Phan uses the equity method to account for the investment. Any difference between implied and book values of the interest acquired relates to Sato Company land, which is included in Other Assets.

Required:
A. Verify the $406,888 balance in the investment account at the end of 2023.
B. Prepare a consolidated financial statements workpaper for Phan Company and its subsidiary Sato Company on December 31, 2023.

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Current Assets Investment in Sato Company Other Assets Dividends Declared Cost of Goods Sold Other Expenses Phan $165,500 406,888 920,000 150,000 1,100,000 350,000 $3,092,388 Sato $138,000 672,000 70,000 320,000 130,000 $1,330,000