On January $1,2023,$ Pulaski, Incorporated, acquired a $60$ percent interest in the common stock of Sheridan, Incorporated, for $$420,000.$ Sheridan's book value on that date consisted of common stock of $$100,000$ and retained earnings of $$248,300.$ Also, the acquisition$-$date fair value of the $40$ percent noncontrolling interest was $$280,000.$ The subsidiary held patents $($with a $10-$year remaining life$)$ that were undervalued within the company's accounting records by $$87,100$ and also had unpatented technology $(15-$year estimated remaining life$)$ undervalued by $$63,000.$ Any remaining excess acquisition$-$date fair value was assigned to an indefinite$-$lived trade name. Since acquisition, Pulaski has applied the equity method to its Investment in Sheridan account. At year$-$end, there are no intra$-$entity payables or receivables.

Intra$-$entity inventory sales between the two companies have been made as follows:

Year Cost to Pulaski Transfer Price to Sheridan Ending Balance $($at transfer price$)$

$2023$ $ $138,000$ $ $172,500$ $ $57,500$

$2024112,800150,40037,600$

The individual financial statements for these two companies as of December $31,2024,$ and the year then ended follow:

Items Pulaski, Incorporated Sheridan, Incorporated

Sales $ $(760,000)$ $ $(399,000)$

Cost of goods sold $499,500243,400$

Operating expenses $202,71082,800$

Equity in earnings in Sheridan $(38,034)0$

Net income $ $(95,824)$ $ $(72,800)$

Retained earnings, $1/1/24$ $ $(829,700)$ $ $(286,100)$

Net income $(95,824)(72,800)$

Dividends declared $51,30021,300$

Retained earnings, $12/31/24$ $ $(874,224)$ $ $(337,600)$

Cash and receivables $ $297,100$ $ $153,700$

Inventory $279,100133,900$

Investment in Sheridan $448,6880$

Buildings $($net$)370,000208,500$

Equipment $($net$)264,00092,100$

Patents $($net$)026,800$

Total assets $ $1,658,888$ $ $615,000$

Liabilities $ $(484,664)$ $ $(177,400)$

Common stock $(300,000)(100,000)$

Retained earnings, $12/31/24(874,224)(337,600)$

Total liabilities and equities $ $(1,658,888)$ $ $(615,000)$

Note: Parentheses indicate a credit balance.

Required:

Show how Pulaski determined the $$448,688$ Investment in Sheridan account balance. Assume that Pulaski defers $100$ percent of downstream intra$-$entity profits against its share of Sheridan$$s income.

Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December $31,2024$