Fran Corporation acquired all outstanding $10 par value voting common stock of Brey Inc. on January 1, 20X9, in exchange for 25,000 shares of its $20 par value voting common stock. On December 31, 20X8, Frans common stock had a closing market price of $30 per share on a national stock exchange. The acquisition was appropriately accounted for under the acquisition method. Both companies continued to operate as separate business entities maintaining separate accounting records with years ending December 31. Fran accounts for its investment in Brey stock using the fully adjusted equity method (i.e., adjusting for unrealized intercompany profits).

On December 31, 20X9, the companies had condensed financial statements as follows:

	Fran Corporation			Brey Inc.
Income Statement	Dr (Cr)			Dr (Cr)
Net Sales	$	(3,800,000	)	$	(1,500,000	)
Income from Brey		(128,000	)
Gain on Sale of Warehouse		(30,000	)
Cost of Goods Sold		2,360,000			870,000
Operating Expenses (including depreciation)		1,100,000			440,000
Net Income	$	(498,000	)	$	(190,000	)
Retained Earnings Statement
Balance, 1/1/X9	$	(440,000	)	$	(156,000	)
Net Income		(498,000	)		(190,000	)
Dividends Paid					40,000
Balance, 12/31/X9		(938,000	)	$	(306,000	)
Balance Sheet
Assets:
Cash	$	570,000		$	150,000
Accounts Receivable (net)		860,000			350,000
Inventories		1,060,000			410,000
Land, Plant, & Equipment		1,320,000			680,000
Accumulated Depreciation		(370,000	)		(210,000	)
Investment in Brey		838,000
Total Assets	$	4,278,000		$	1,380,000
Liabilities & Stockholders Equity:
Accounts Payable & Accrued Expenses	$	(1,340,000	)	$	(594,000	)
Common Stock		(1,700,000	)		(400,000	)
Additional Paid-in Capital		(300,000	)		(80,000	)
Retained Earnings		(938,000	)		(306,000	)
Total Liabilities & Equity	$	(4,278,000	)	$	(1,380,000	)

Additional Information

No changes occurred in the Common Stock and Additional Paid-in Capital accounts during 20X9 except the one necessitated by Fran's acquisition of Brey.

At the acquisition date, the fair value of Breys machinery exceeded its book value by $54,000. The excess cost will be amortized over the estimated average remaining life of six years. The fair values of all of Breys other assets and liabilities were equal to their book values. At December 31, 20X9, Frans management reviewed the amount attributed to goodwill as a result of its purchase of Breys common stock and concluded an impairment loss of $35,000 should be recognized in 20X9.

During 20X9, Fran purchased merchandise from Brey at an aggregate invoice price of $180,000, which included a 100 percent markup on Breys cost. At December 31, 20X9, Fran owed Brey $86,000 on these purchases, and $36,000 of this merchandise remained in Frans inventory.

Required:

Complete the consolidation worksheet that would be used to prepare a consolidated income statement and a consolidated retained earnings statement for the year ended December 31, 20X9, and a consolidated balance sheet as of December 31, 20X9. Ignore income tax considerations. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.)