On January 1, 2018, Phelps Company purchased an 85% interest in Sloane Company for $955,000 when the retained earnings of Sloane Company were $150,000. The difference between implied and book value was assigned as follows:

Inventory....................................................$48,000Land..............................................................36,000Discount on Bonds Payable.......................48,000Goodwill.......................................................91,529

One-half of the inventory was sold in 2018 and the remaining inventory was sold in 2019. The bonds mature in eight years.

On December 31, 2018, Phelps Company?s inventory contained $10,000 in unrealized intercompany profit. During 2019 Phelps Company sold merchandise with a cost of $200,000 to Sloane Company at a 30% markup on cost. Only $65,000 (selling price) of this merchandise remains in Sloane Company?s 2019 ending inventory. As of December 31, 2019, Sloane Company owes Phelps Company $40,000 for merchandise purchased during 2019.

Equipment with a book value of $500,000 was sold by Sloane Company on January 2, 2019, to Phelps Company for $640,000. This equipment had an estimated useful life when purchased by Sloane Company on July 1, 2016, of 10 years.

Financial data for 2019 are presented here:

Required:

Prepare a consolidated financial statements workpaper for the year ended December 31, 2019.

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Phelps Company Sloane Company $ 560,000 Sales Other Income Dividend Income $1,291,500 140,000 42,500 Total Revenue 1,334,000 700,000 Cost of Goods Sold 660,000 300,000 Depreciation Expense 138,000 20,000 Interest Expense 8,000 10,000 Other Expenses Total Cost and Expense 174,000 140,000 980,000 $ 354,000 470,000 Net Income $ 230,000 1/1 Retained Earnings $ 350,500 $ 250,000 Net Income 354,000 230,000 Dividends Declared |(100,000) $ 604,500 (50,000) 12/31 Retained Earnings $ 430,000 Cash $ 127,000 $ 70,000 Accounts Receivable 300,000 210,000 Inventory 270,000 175,000 Investment in Sloane Company 955,000 Land 100,000 290,000 Plant and Equipment 800,000 800,000 Accumulated Depreciation (200,000) $2,352,000 (200,000) Total Assets $1,345,000 $ 167,500 $ 65,000 Accounts Payable Bonds Payable Capital Stock Retained Earnings Total Liabilities and Equity 80,000 100,000 1,500,000 750,000 604,500 430,000 $2,352,000 $1,345,000