On January 1, 2014, Postman Company acquired Spartan Company. Postman paid $300,000 for 80% of Spartans common stock. On the date of acquisition, Spartan had the following balance sheet:

Buildings, which have a 20-year life, are undervalued by $130,000. Equipment, which has a 5-year life, is undervalued by $50,000. Any remaining difference is considered to be goodwill/gain. Spartan issued $100,000 of 8%, 10-year bonds for $103,432 on January 1, 2011, when the market rate was 7.5%. Annual interest is paid on December 31. Postman purchased the bonds for $95,514 on January 1, 2015, when the market rate was 9%. Both companies use the effective interest method to amortize the premium/discount on the bonds. Postman and Spartan prepared the following bond amortization schedules:

Spartan sold a piece of Land to Postman for $70,000 on January 1, 2015. It cost Spartan $60,000 to purchase the land. On January 1, 2016, Postman held merchandise acquired from Spartan for $12,000. This beginning inventory had an applicable gross profit of 25%. During 2016, Spartan sold $25,000 worth of merchandise to Postman. Postman held $10,000 of this merchandise on December 31, 2016. This ending inventory had an applicable gross profit of 25%. Postman owed Spartan $6,000 on December 31, 2016 as a result of these intercompany sales. Postman and Spartan had the following trial balances on December 31, 2016:

prepare the following:

-Consolidated Financial Statements -Intercompany Fixed Asset Profit Deferral Schedule -Proof for Bond Elimination Schedule -Income Distribution Schedules: Parent and Subsidiary

\begin{tabular}{|c|r|r|r|r|r|r|r|} \hline \multicolumn{3}{|c|}{ Spartan } & \multicolumn{4}{|c|}{ Postman } \\ \hline Period & Nominal Interest (\$) & Effective Interest (\$) & Balance (\$) & Period & Nominal Interest (\$) & Effective Interest (\$) & Balance (\$) \\ \hline Jan 1, 2011 & & & 103,432 & Jan 1,2011 & & & \\ \hline Jan 1, 2012 & 8,000 & 7,757 & 103,189 & Jan 1,2012 & & & \\ \hline Jan 1, 2013 & 8,000 & 7,739 & 102,928 & Jan 1,2013 & & & \\ \hline Jan 1, 2014 & 8,000 & 7,720 & 102,648 & Jan 1,2014 & & & \\ \hline Jan 1, 2015 & 8,000 & 7,699 & 102,347 & Jan 1,2015 & & & 95,514 \\ \hline Jan 1, 2016 & 8,000 & 7,676 & 102,023 & Jan 1,2016 & 8,000 & 8,596 & 96,110 \\ \hline Jan 1, 2017 & 8,000 & 7,652 & 101,675 & Jan 1,2017 & 8,000 & 8,650 & 96.760 \\ \hline Jan 1,2018 & 8,000 & 7,626 & 101,301 & Jan 1,2018 & 8,000 & 8,708 & 97,468 \\ \hline Jan 1,2019 & 8,000 & 7,598 & 100,899 & Jan 1,2019 & 8,000 & 8,772 & 98,240 \\ \hline Jan 1,2020 & 8,000 & 7,567 & 100,466 & Jan 1,2020 & 8,000 & 8,842 & 99,082 \\ \hline Jan 1,2021 & 8,000 & 7,534 & 100,000 & Jan 1,2021 & 8,000 & 8,918 & 100,000 \\ \hline \end{tabular} \begin{tabular}{|l|r|r|} \hline \multicolumn{1}{|c|}{ Balances } & Postman & \multicolumn{1}{|c|}{ Spartan } \\ \hline Cash & 220,486 & 159,347 \\ \hline Accounts Receivable & 220,000 & 91,000 \\ \hline Inventory & 140,000 & 55,000 \\ \hline Land & 270,000 & \\ \hline Buildings & 600,000 & 100,000 \\ \hline Accumulated Depreciation - Buildings & (340,000) & (45,000) \\ \hline Equipment & 150,000 & 80,000 \\ \hline Accumulated Depreciation - Equipment & (105,000) & (60,000) \\ \hline Investment in Subsidiary & 335,737 & \\ \hline Investment in Subsidiary Bonds & 96,760 & \\ \hline Accounts Payable & (40,000) & (34,000) \\ \hline Bonds Payable & & (100,000) \\ \hline Premium on Bonds Payable & & (1,675) \\ \hline Common Stock & (100,000) & (10,000) \\ \hline Pain In Excess & (800,000) & (90,000) \\ \hline Retained Earnings, January 1 & (475,455) & (137,324) \\ \hline Sales & (900,000) & (350,000) \\ \hline Cost of Goods Sold & 530,000 & 230,000 \\ \hline Depreciation Expense - Buildings & 30,000 & 5,000 \\ \hline Depreciation Expense - Equipment & 15,000 & 10,000 \\ \hline Other Expenses & 155,000 & 80,000 \\ \hline Interest Revenue & (8,650) & \\ \hline Interest Expense & & 7,652 \\ \hline Subsidiary Income & (13,878) & \\ \hline Dividends Declared & 20,000 & 10,000 \\ \hline Total & 0 & 0 \\ \hline \end{tabular}