As described in Problem 6-6, Pya Inc. t required 80% of Sya Inc. for $260, OOC 1 on 12/31/05. The financial statements as of 12/31/06, one year after the acquisition date, follow: Pya Sya Income Statement (2006)

Sales .

$ 950,000 $ 600,000 Cost of sales . (520,000) (300,000)

Expenses . (370,000) (240,000)

Equity in net income . 40,000 Net Income . $ 100,000 $ 60,000 Balance Sheet (as of 12/31/06)

Cash . $ 133,000

$ 25,000 Accounts receivable, net . 95,000 60,000 Inventory . 115,000 120,000 Investment in Sya . 272,000 Land . 100,000 70,000 Buildings and equipment . 250,000 224,000 Accumulated depreciation . (210,000) (59,000) Total Assets . $ 755,000 $ 440,000 Payables and accruals . $ 65,000 Long-term debt . $ 75,000 20,000 150,000 Common stock . 300,000 100,000 Retained earnings . 370,000 115,000 Total Liabilities and Equity .

$ 755,000 $ 440,000 Dividends declared during 2006 . $ 80,000 $ 35,000 1. Update the analysis of the Investment account through 12/31/06.

2. Prepare the consolidation entries at 12/31/06.

3. Prepare a consolidation worksheet at 12/31/06. (The parent’s retained earnings at 12/31/05 were $350,000.)