On 1/1/2017, Cali Co. acquired all of Malibu's outstanding common stock by issuing 20,000 shares of its own $1 Par Common Stock. On the acquisition date Cali Co.'s stock actively traded at $23.50 per share.

On the acquisition date, Malibu reported retained earnings of $230,000 and a total book value of $360,000.

At that date, Malibu Royalty agreements are undervalued by $60,000. The royalty agreements assume to have a useful life of 6 years, with no residual value.

Also, Malibu owned a trademark with a fair value of $40,000 with a 10 year remaining life that was not reflected on its books.

Malibu declared and paid dividends in the same accounting period.

Required: As the CFO of Cali Co., you hired an accountant to prepare Cali Co.'s consolidated financial statements. Following is the consolidating worksheet prepared as of December 31, 2021.

You are to review the consolidating worksheet and identify and correct any errors. Where required to proof balances, show all calculations.

CALI CO. COMPANY AND CONSOLIDATED SUBSIDIARY Consolidation Worksheet For Year Ending December 31, 2021 Consolidation Entries Debit Credit Accounts Revenues Cost of goods sold Amortization expense Dividend income Net income Cali Co. (610,000) 270,000 115,000 (5,000) (230,000) Malibu (370,000) 140,000 80,000 Consolidated Totals (980,000) 410,000 210,000 (5,000) (365,000) [E] 15,000 (150,000) Retained earnings, 1/1 (880,000) [C] 215,000 (1,095,000) [S] 490,000 Net income (230,000) Dividends declared 90,000 Retained earnings, 12/31 (1,020,000) (490,000) (150,000) 5,000 (635,000) (365,000) 95,000 (1,365,000) Cash Receivables Inventory 110,000 380,000 560,000 470,000 15,000 220,000 280,000 125,000 600,000 840,000 15,000 [C] 215,000 [S] [A] 620,000 50,000 460,000 920,000 340,000 380,000 Copyrights Royalty agreements Trademark Total assets [A] [A] 30,000 35,000 [E] [E] 10,000 5,000 800,000 1,320,000 30,000 3,730,000 2,900,000 1,235,000 (470,000) Liabilities (780,000) Preferred stock (300,000) Common stock (500,000) Additional paid-in capital (300,000) Retained earnings, 12/31 (1,020,000) Total liabilities and equity (2,900,000) [S] [S] 100,000 30,000 (100,000) (30,000) (635,000) (1,235,000) (1,250,000) (300,000) (500,000) (300,000) (1,655,000) (4,005,000) 915,000 900,000 CALI CO. COMPANY AND CONSOLIDATED SUBSIDIARY Consolidation Worksheet For Year Ending December 31, 2021 Consolidation Entries Debit Credit Accounts Revenues Cost of goods sold Amortization expense Dividend income Net income Cali Co. (610,000) 270,000 115,000 (5,000) (230,000) Malibu (370,000) 140,000 80,000 Consolidated Totals (980,000) 410,000 210,000 (5,000) (365,000) [E] 15,000 (150,000) Retained earnings, 1/1 (880,000) [C] 215,000 (1,095,000) [S] 490,000 Net income (230,000) Dividends declared 90,000 Retained earnings, 12/31 (1,020,000) (490,000) (150,000) 5,000 (635,000) (365,000) 95,000 (1,365,000) Cash Receivables Inventory 110,000 380,000 560,000 470,000 15,000 220,000 280,000 125,000 600,000 840,000 15,000 [C] 215,000 [S] [A] 620,000 50,000 460,000 920,000 340,000 380,000 Copyrights Royalty agreements Trademark Total assets [A] [A] 30,000 35,000 [E] [E] 10,000 5,000 800,000 1,320,000 30,000 3,730,000 2,900,000 1,235,000 (470,000) Liabilities (780,000) Preferred stock (300,000) Common stock (500,000) Additional paid-in capital (300,000) Retained earnings, 12/31 (1,020,000) Total liabilities and equity (2,900,000) [S] [S] 100,000 30,000 (100,000) (30,000) (635,000) (1,235,000) (1,250,000) (300,000) (500,000) (300,000) (1,655,000) (4,005,000) 915,000 900,000