Following are separate financial statements of Michael Company and Aaron Company as of December 31, 2024 (credit balances indicated by parentheses). Michael acquired all of Aarons outstanding voting stock on January 1, 2020, by issuing 20,000 shares of its own $1 par common stock. On the acquisition date, Michael Companys stock actively traded at $31.00 per share.

Accounts	Michael Company 12/31/24	Aaron Company 12/31/24
Revenues	$ (742,000)	$ (466,500)
Cost of goods sold	336,000	188,250
Amortization expense	125,100	121,000
Dividend income	(5,000)	0
Net income	$ (285,900)	$ (157,250)
Retained earnings, 1/1/24	$ (932,000)	$ (734,000)
Net income (above)	(285,900)	(157,250)
Dividends declared	90,000	5,000
Retained earnings, 12/31/24	$ (1,127,900)	$ (886,250)
Cash	$ 114,000	$ 23,300
Receivables	477,000	268,000
Inventory	590,000	340,000
Investment in Aaron Company	620,000	0
Copyrights	476,000	371,000
Royalty agreements	1,005,000	447,000
Total assets	$ 3,282,000	$ 1,449,300
Liabilities	$ (1,054,100)	$ (433,050)
Preferred stock	(300,000)	0
Common stock	(500,000)	(100,000)
Additional paid-in capital	(300,000)	(30,000)
Retained earnings, 12/31/24	(1,127,900)	(886,250)
Total liabilities and equity	$ (3,282,000)	$ (1,449,300)

On the date of acquisition, Aaron reported retained earnings of $380,000 and a total book value of $510,000. At that time, its royalty agreements were undervalued by $60,000. This intangible was assumed to have a six-year remaining life with no residual value. Additionally, Aaron owned a trademark with a fair value of $50,000 and a 10-year remaining life that was not reflected on its books. Aaron declared and paid dividends in the same period.

Required:

Using the preceding information, prepare a consolidation worksheet for these two companies as of December 31, 2024.

Assuming that Michael applied the equity method to this investment, what would the Equity in Subsidiary Earnings, Retained Earnings, and Investment account balances be on the parent's individual financial statements?

\begin{tabular}{|c|c|c|c|c|c|c|c|} \hline \multicolumn{8}{|c|}{ MICHAEL COMPANY AND CONSOLIDATED SUBSIDIARY } \\ \hline \multicolumn{8}{|c|}{ Consolidation Worksheet } \\ \hline \multicolumn{8}{|c|}{ For Year Ending December 31, 2024} \\ \hline \multirow[b]{2}{*}{ Accounts } & \multirow{2}{*}{\multicolumn{2}{|c|}{ Michael }} & \multirow{2}{*}{\multicolumn{2}{|c|}{ Aaron }} & \multicolumn{2}{|c|}{ Consolidation Entries } & \multirow{2}{*}{\begin{tabular}{c} Consolidated \\ Totals \end{tabular}} \\ \hline & & & & & Debit & Credit & \\ \hline Revenues & $ & (742,000) & $ & (466,500) & & & $(1,208,500) \\ \hline Cost of goods sold & & 336,000 & & 188,250 & & & 524,250 \\ \hline Amortization expense & & 125,100 & & 121,000 & 15,000 & & 261,100 \\ \hline Dividend income & & (5,000) & & 0 & 5,000 & & 00 \\ \hline Net income & $ & (285,900) & $ & (157,250) & & & $(423,150) \\ \hline Retained earning, 1/1/24 (Michael) & & (932,000) & & 0 & & & \\ \hline Retained earning, 1/1/24 (Aaron) & & 0 & & (734,000) & & & \\ \hline Net income (above) & & (285,900) & & (157,250) & & & (423,150) \\ \hline Dividends declared & & 90,000 & & 5,000 & & & \\ \hline Retained earnings, 12/31/24 & $ & (1,127,900) & $ & (886,250) & & & \\ \hline Cash & $ & 114,000 & $ & 23,300 & & & \\ \hline Receivables & & 477,000 & & 268,000 & & & \\ \hline Inventory & & 590,000 & & 340,000 & & & \\ \hline Investment in Aaron Company & & 620,000 & & 0 & & & \\ \hline Copyrights & & 476,000 & & 371,000 & & & \\ \hline Royalty agreements & & 1,005,000 & & 447,000 & & & \\ \hline Trademark & & 0 & & 0 & & & \\ \hline Total assets & $ & 3,282,000 & $ & 1,449,300 & & & \\ \hline Liabilities & $ & (1,054,100) & $ & (433,050) & & & \\ \hline Preferred stock & & (300,000) & & 0 & & & \\ \hline Common stock & & (500,000) & & (100,000) & & & \\ \hline Additional paid-in capital & & (300,000) & & (30,000) & & & \\ \hline Retained earnings, 12/31/24 (above) & & (1,127,900) & & (886,250) & & & \\ \hline Total liabilities and equity & $ & (3,282,000) & $ & (1,449,300) & 20,000 & $ & \\ \hline \end{tabular} Assuming that Michael applied the equity method to this investment, what Earnings, and Investment account balances be on the parent's individual