Assume that a Parent company acquires a 90% interest in its Subsidiary on January 1, 2016. On the date of acquisition, the fair value of the 90% controlling interest was $2,160,000 and the fair value of the 10% noncontrolling interest was $240,000. On January 1, 2016, the book value of net assets equaled $2,400,000 and the fair value of the identifiable net assets equaled the book value of identifiable net assets (i.e. there was no AAP or Goodwill). The subsidiarys retained earnings balance was $452,000 on the date of acquisition. The parent uses the cost method to account for its investment in the subsidiary.

On December 31, 2017, the Subsidiary company issued $2,000,000 (face) 7 percent, five-year bonds to an unaffiliated company for $2,173,179 (i.e. the bonds had an effective yield of 5 percent). The bonds pay interest annually on December 31, and the bond premium is amortized using the straight-line method. This results in annual bond-payable premium amortization equal to $34,636 per year.

On December 31, 2019, the Parent paid $1,948,458 to purchase all of the outstanding Subsidiary company bonds (i.e. the bonds had an effective yield of 8 percent). The bond discount is amortized using the straight-line method, which results in annual bond-investment discount amortization equal to $17,181 per year.

The Parent and the Subsidiary report the following financial statements for the year ended December 31, 2020:

Income Statement
	Parent	Subsidiary
Sales	$12,500,000	$1,700,000
Cost of goods sold	(9,200,000)	(990,000)
Gross Profit	3,300,000	710,000
Income (loss) from subsidiary	27,000
Bond interest income	157,181
Bond interest expense		(105,364)
Operating expenses	(2,500,000)	(410,000)
Net income	$ 984,181	$ 194,636

Statement of Retained Earnings
	Parent	Subsidiary
BOY Retained Earnings	$7,360,351	$ 990,000
Net income	984,181	194,636
Dividends	(200,000)	(30,000)
EOY Retained Earnings	$8,144,532	$1,154,636

Balance Sheet
	Parent	Subsidiary
Assets:
Cash	$ 1,750,000	$1,020,000
Accounts receivable	2,300,000	1,150,000
Inventory	2,400,000	1,500,907
Investment in subsidiary	2,160,000
Investment in bonds	1,965,639
PPE, net	14,025,000	4,389,000
	$24,600,639	$8,059,907
Liabilities and Stockholders Equity:
Accounts payable	$ 1,600,000	$ 838,000
Current Liabilities	2,200,000	1,100,000
Bonds payable		2,069,271
Long-term Liabilities	2,226,100	950,000
Common Stock	1,162,000	398,000
APIC	9,268,007	1,550,000
Retained Earnings	8,144,532	1,154,636
	$24,600,639	$8,059,907

Required:

Provide the consolidation entries and prepare a consolidation worksheet for the year ended December 31, 2018.