Pitts Company owns 80% of the common stock of Shannon Company. The stock was purchased for $960,000 on January 1, 2017, when Shannon Company?s retained earnings were $675,000. On January 1, 2019, Shannon Company sold fixed assets to Pitts Company for $960,000; Shannon Company had purchased these assets for $1,350,000 on January 1, 2009, at which time their estimated useful life was 25 years. The estimated remaining useful life to Pitts Company on 1/1/19 is 10 years. Both companies employ the straight-line method of depreciation. The financial data for 2020 are presented here:

Required:

A. Prepare a consolidated statements workpaper for the year ended December 31, 2020.

B. Calculate consolidated retained earnings on December 31, 2020, using an analytical or t-account approach.

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Pitts Company Shannon Compaпy Sales $1,350,000 $1,950,000 60,000 Dividend Income 1,350,000 Total Revenue 2,010,000 1,350,000 Cost of Goods Sold Other Expenses Total Cost and Expense Net Income 900,000 150,000 225,000 1,575,000 $ 435,000 1,050,000 $ 300,000 1/1 Retained Earnings $1,215,000 $1,038,000 Net Income 435,000 300,000 Dividends Declared (150,000) (75,000) $1,263,000 12/31 Retained Earnings $1,500,000 Inventory $ 498,000 $ 225,000 Investment in Shannon Company 960,000 Fixed Assets 2,168,100 2,625,000 Accumulated Depreciation-Fixed Assets (900,000) (612,000) Total Assets $2,726,100 $2,238,000 Liabilities $ 465,600 $ 450,000 Common Stock 760,500 525,000 Retained Earnings Total Liabilities and Equity 1,500,000 1,263,000 $2,726,100 $2,238,000