Balance Sheet As of December 31 2017 Portly Company Stout, Inc. Assets Inventory 3 2,500,000 $ 1,500,000 0 her Assets 10,000,000 0,000,000 Investment in Sub. 3,502,900 Total Assets 16,082,900 $ 7.500.000 Liabilities and Equities Liabilities 2,290,600 0 1,200,000 3 ' ital StOCk 21ml\" 1 law!\" Retained Earnings 11,504,300 5,100,000 Total Liabilities and Equities $ 10,002,900 $ 7,500,000 Income Statement For the Year Ended December 31 2017 Partly Company Stout, Inc. 3 15,000,000 $ 12,000,000 Income From Sub. 1 504 300 Total Revenue 16,504,300 12,000,000 . st of Goods Sold 0,200,000 0,000,000 operating Expenses 3,000,000 2,000,000 Total Expenses 11,000,000 9,400,000 Net Income 5 4,704,300 3 2000.000 Statement of Retained Earnings For the Year Ended December 31 2017 Portly Company Stout. Inc. 3 3,500,000 ' . -: Net Income 2,600,000 Deduct: Dividends 1 000,000 Ending Balance $ 5,100,000 The last column, the nal column of the 'phantom' books, of Portly Company's working paper prepared for December 30. 2016. is shown as follows: Portly Company, and Stout, Inc. a 60% owned subsidiary, engage in extensive intercompany transactions involving raw materials, component parts, and completed products. Portly Company purchased its interest in Stout. Inc. several years ago at book value. and carries the investment account at equity. lntercompany sales for the year ended December 31, 2017,and the uncomtirmed intercompany profits in the beginning and ending inventories of both companies are summarized below: Portly Company Stout, Inc. InterCOmpany profit in inventory, December 31 , 2016 5 99,000 $ 162,000 lnteroompany sales to affiliate 3,300,000 3,600,000 Intercompany profit in inventory, December 31, 2017 $ 148,500 $ 108,000 The individual unconsolidated financial statements for both companies for the year ended December 31, 2017, are shown below