On January $1,2020,$ Pinnacle Corporation exchanged $$3,711,000$ cash for $100$ percent of the outstanding voting stock of Strata Corporation. On the acquisition date, Strata had the following balance sheet:

Cash $ $296,000$ Accounts payable $ $435,000$

Accounts receivable $312,000$ Long$-$term debt $2,805,000$

Inventory $377,000$ Common stock $1,500,000$

Buildings $($net$)2,030,000$ Retained earnings $1,550,000$

Licensing agreements $3,275,000$

Total assets $ $6,290,000$ Total liabilities and equity $ $6,290,000$

Pinnacle prepared the following fair$-$value allocation:

Fair value of Strata $($consideration transferred$)$ $ $3,711,000$

Carrying amount acquired $3,050,000$

Excess fair value $ $661,000$

to buildings $($undervalued$)$ $ $338,000$

to licensing agreements $($overvalued$)(106,000)232,000$

to goodwill $($indefinite life$)$ $ $429,000$

At the acquisition date, Strata$$s buildings had a $10-$year remaining life and its licensing agreements were due to expire in $5$ years. On December $31,2021,$ Strata$$s accounts payable included an $$97,000$ current liability owed to Pinnacle. Strata Corporation continues its separate legal existence as a wholly owned subsidiary of Pinnacle with independent accounting records. Pinnacle employs the initial value method in its internal accounting for its investment in Strata.

The separate financial statements for the two companies for the year ending December $31,2021,$ follow. Credit balances are indicated by parentheses.

Pinnacle Strata

Sales $ $(7,782,000)$ $ $(3,356,000)$

Cost of goods sold $5,010,0001,840,000$

Interest expense $256,000200,000$

Depreciation expense $616,000423,000$

Amortization expense $655,000$

Dividend income $(35,000)$

Net income $ $(1,935,000)$ $ $(238,000)$

Retained earnings $1/1/21$ $ $(5,060,000)$ $ $(1,899,600)$

Net income $(1,935,000)(238,000)$

Dividends declared $600,00035,000$

Retained Earnings $12/31/21$ $ $(6,395,000)$ $ $(2,102,600)$

Cash $ $294,000$ $ $539,600$

Accounts receivable $1,545,000247,500$

Inventory $985,0001,710,000$

Investment in Strata $3,711,000$

Buildings $($net$)5,880,0002,208,000$

Licensing agreements $1,965,000$

Goodwill $405,000$

Total assets $ $12,820,000$ $ $6,670,100$

Accounts payable $ $(415,000)$ $ $(957,500)$

Long$-$term debt $(3,010,000)(2,110,000)$

Common stock $(3,000,000)(1,500,000)$

Retained earnings $12/31/21(6,395,000)(2,102,600)$

Total Liabilities and Owner's equity $ $(12,820,000)$ $ $(6,670,100)$

Prepare a worksheet to consolidate the financial information for these two companies.

Compute the following amounts that would appear on Pinnacle$$s $2021$ separate $($nonconsolidated$)$ financial records if Pinnacle$$s investment accounting was based on the equity method.

Subsidiary income.

Retained earnings, $1/1/21.$

Investment in Strata.