On January $1,2023,$ Pulaski, Incorporated, acquired a $60$ percent interest in the common stock of Sheridan, Incorporated, for $$383,400.$ Sheridan's book value on that date consisted of common stock of $$100,000$ and retained earnings of $$226,700.$ Also, the acquisition$-$date fair value of the $40$ percent noncontrolling interest was $$255,600.$ The subsidiary held patents $($with a $10-$year remaining life$)$ that were undervalued within the company's accounting records by $$88,000$ and also had unpatented technology $(15-$year estimated remaining life$)$ undervalued by $$63,900.$ 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$)$

$2023$ $ $138,300$ $ $172,875$ $ $57,625$

$2024112,800150,40037,600$

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 $ $(763,000)$ $ $(403,000)$

Cost of goods sold $501,500245,800$

Operating expenses $203,08583,600$

Equity in earnings in Sheridan $(38,449)0$

Net income $ $(96,864)$ $ $(73,600)$

Retained earnings, $1/1/24$ $ $(840,900)$ $ $(286,200)$

Net income $(96,864)(73,600)$

Dividends declared $51,60021,400$

Retained earnings, $12/31/24$ $ $(886,164)$ $ $(338,400)$

Cash and receivables $ $301,200$ $ $154,100$

Inventory $283,000134,200$

Investment in Sheridan $425,3480$

Buildings $($net$)374,000208,700$

Equipment $($net$)266,90092,200$

Patents $($net$)027,000$

Total assets $ $1,650,448$ $ $616,200$

Liabilities $ $(464,284)$ $ $(177,800)$

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

Retained earnings, $12/31/24(886,164)(338,400)$

Total liabilities and equities $ $(1,650,448)$ $ $(616,200)$

Note: Parentheses indicate a credit balance.

Required:

a$.$ Show how Pulaski determined the $$425,348$ Investment in Sheridan account balance. Assume that Pulaski defers $100$ percent of downstream intra$-$entity profits against its share of Sheridan$$s income.

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