On January $1,2023,$ Pulaski, Incorporated, acquired a $60$ percent interest in the common stock of Sheridan, Incorporated, for $$334,800.$ Sheridan's book value on that date consisted of common stock of $$100,000$ and retained earnings of $$197,900.$ Also, the acquisition$-$date fair value of the $40$ percent noncontrolling interest was $$223,200.$ The subsidiary held patents $($with a $10-$year remaining life$)$ that were undervalued within the company's accounting records by $$86,200$ and also had unpatented technology $(15-$year estimated remaining life$)$ undervalued by $$62,400.$ 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$)$

$2023$ $ $137,700$ $ $172,125$ $ $57,375$

$2024113,400151,20037,800$

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 $ $(757,000)$ $ $(398,000)$

Cost of goods sold $497,500242,800$

Operating expenses $201,70582,600$

Equity in earnings in Sheridan $(37,917)0$

Net income $ $(95,712)$ $ $(72,600)$

Retained earnings, $1/1/24$ $ $(838,200)$ $ $(285,800)$

Net income $(95,712)(72,600)$

Dividends declared $50,90021,100$

Retained earnings, $12/31/24$ $ $(883,012)$ $ $(337,300)$

Cash and receivables $ $300,500$ $ $153,600$

Inventory $282,300133,800$

Investment in Sheridan $393,6540$

Buildings $($net$)366,000208,300$

Equipment $($net$)261,10091,800$

Patents $($net$)026,600$

Total assets $ $1,603,554$ $ $614,100$

Liabilities $ $(420,542)$ $ $(176,800)$

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

Retained earnings, $12/31/24(883,012)(337,300)$

Total liabilities and equities $ $(1,603,554)$ $ $(614,100)$

Note: Parentheses indicate a credit balance.

Required:

Show how Pulaski determined the $$393,654$ Investment in Sheridan account balance. Assume that Pulaski defers $100$ percent of downstream intra$-$entity profits against its share of Sheridan$$s income.

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

Consideration transferredIncrease in Shenidan's retained earnings $1/1/23$ to $1$i$/1/24$Excess fai value amoriZ$2023$ ending inventory profit deferraPuaskis quity in earnings ofStinso or $2024$Sherdan $2024$ diwidends declared to Pulaskinvestment account balance $1231/24$s$334\mathrm{.}80$o$|$S$334,300$Required B

C