On January $1,2023,$ Pulaski, Incorporated, acquired a $60$ percent interest in the common stock of Sheridan, Incorporated, for $$340,200.$ Sheridan's book value on that date consisted of common stock of $$100,000$ and retained earnings of $$201,100.$ Also, the acquisition$-$date fair value of the $40$ percent noncontrolling interest was $$226,800.$ The subsidiary held patents $($with a $10-$year remaining life$)$ that were undervalued within the company's accounting records by $$76,900$ and also had unpatented technology $(15-$year estimated remaining life$)$ undervalued by $$52,800.$ 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$)$

$2023$ $ $126,300$ $ $157,875$ $ $52,625$

$2024112,500150,00037,500$

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 $ $(726,000)$ $ $(362,000)$

Cost of goods sold $477,200221,200$

Operating expenses $195,76075,400$

Equity in earnings in Sheridan $(33,664)0$

Net income $ $(86,704)$ $ $(65,400)$

Retained earnings, $1/1/24$ $ $(770,600)$ $ $(282,200)$

Net income $(86,704)(65,400)$

Dividends declared $47,50017,900$

Retained earnings, $12/31/24$ $ $(809,804)$ $ $(329,700)$

Cash and receivables $ $276,000$ $ $150,100$

Inventory $259,200130,900$

Investment in Sheridan $394,5330$

Buildings $($net$)334,000204,600$

Equipment $($net$)238,50088,400$

Patents $($net$)022,800$

Total assets $ $1,502,233$ $ $596,800$

Liabilities $ $(392,429)$ $ $(167,100)$

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

Retained earnings, $12/31/24(809,804)(329,700)$

Total liabilities and equities $ $(1,502,233)$ $ $(596,800)$

Note: Parentheses indicate a credit balance.

Required:

Show how Pulaski determined the $$394,533$ Investment in Sheridan account balance. Assume that Pulaski defers $100$ percent of downstream intra$-$entity profits against its share of Sheridan$$s income.

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