On January $1,2023,$ Pulaski, Incorporated, acquired a $60$ percent interest in the common stock of Sheridan, Incorporated, for $$351,600.$ Sheridan's book value on that date consisted of common stock of $$100,000$ and retained earnings of $$207,900.$ Also, the acquisition$-$date fair value of the $40$ percent noncontrolling interest was $$234,400.$ The subsidiary held patents $($with a $10-$year remaining life$)$ that were undervalued within the company's accounting records by $$88,600$ and also had unpatented technology $(15-$year estimated remaining life$)$ undervalued by $$64,500.$ 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$)$

$2023$ $ $138,900$ $ $173,625$ $ $57,875$

$2024113,400151,20037,800$

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 $ $(765,000)$ $ $(406,000)$

Cost of goods sold $502,800247,600$

Operating expenses $203,28584,200$

Equity in earnings in Sheridan $(38,749)0$

Net income $ $(97,664)$ $ $(74,200)$

Retained earnings, $1/1/24$ $ $(850,200)$ $ $(286,600)$

Net income $(97,664)(74,200)$

Dividends declared $52,00021,500$

Retained earnings, $12/31/24$ $ $(895,864)$ $ $(339,300)$

Cash and receivables $ $304,600$ $ $154,500$

Inventory $286,200134,500$

Investment in Sheridan $405,1980$

Buildings $($net$)377,000208,800$

Equipment $($net$)269,00092,300$

Patents $($net$)027,300$

Total assets $ $1,641,998$ $ $617,400$

Liabilities $ $(446,134)$ $ $(178,100)$

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

Retained earnings, $12/31/24(895,864)(339,300)$

Total liabilities and equities $ $(1,641,998)$ $ $(617,400)$

Note: Parentheses indicate a credit balance.

Required:

Show how Pulaski determined the $$405,198$ Investment in Sheridan account balance. Assume that Pulaski defers $100$ percent of downstream intra$-$entity profits against its share of Sheridan$$s income.

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

$\backslash$table$[[$Accounts$,,,,,$Consolidation Entries,$\backslash$table$[[$Noncontrolling$],[$Interest$]],\backslash$table$[[$Consolidated$],[$Totals$]]],[$Pulaski$,$Sheridan,Debit,Credit$],[$$$,(765,000),$$$,(406,000),,,,],[$Cost of goods sold,,$502,800,,247,600,,,,],[$Operating expenses,,$203,285,,84,200,,,,],[$Equity in earnings of Sheridan,,$(38,749),,0,,,,],[$Separate company net income,,$(97,664),,(74,200),,,,],[$Consolidated net income$],[$To noncontrolling interest$],[$To Pulaski, Incorporated$],[$Retained earnings $1/1/24,,(850,200),,(286,600),,,,],[$Net income,,$(97,664),,(74,200),,,,],[$Dividends declared,,$52,000,,21,500,,,,],[$Retained earnings $12/31/24,$$$,(895,864),$$$,(339,300),,,,],[$Cash and receivables,$$,304,600,$$$,154,500,,,,],[$Inventory$,,286,200,,134,500,,,,],[$Investment in Sheridan,,$405,198,,0,,,,],[$Buildings $($net$),,377,000,,208,800,,,,],[$Equipment $($net$),,269,000,,92,300,,,,],[$Patents $($net$),,0,,27,300,,,,],[$Unpatented technology$],[$Trade name$],[$Total assets,$$,1,641,998,$$$,617,400,,,,],[$Liabilities$,,(446,134),,(178,100),,,,],[$Common stock,,$(300,000),,(100,000),,,,],[$Noncontrolling interest $1/1/24],[$Noncontrolling interest $12/31/24],[$Retained earnings $12/31/24,,(895,864),,(339,300),,,,],[$Total liabilities and equities,$$,(1,641,998),$$$,(617,400),$$$,$$$,,]]$