On January 1, 2016, Plymouth Corporation acquired 80 percent of the outstanding voting stock of Sander Company in exchange for $1,200,000 cash. At that time, although Sander's book value was $925,000, Plymouth assessed Sander's total business fair value at $1,500,000. Since that time, Sander has neither issued nor reacquired any shares of its own stock. The book values of Sander's individual assets and liabilities approximated their acquisition-date fair values except for the patent account, which was undervalued by $350,000. The undervalued patents had a five-year remaining life at the acquisition date. Any remaining excess fair value was attributed to goodwill. No goodwill impairments have occurred. Sander regularly sells inventory to Plymouth. Below are details of the intra-entity inventory sales for the past three years: Gross Profit Rate on Intra-Entity Inventory Transfers Year 2016 2017 2018 Intra-Entity Sales $ 125,000 220,000 300,000 Intra-Entity Ending Inventory at Transfer Price $ 80.000 125,000 160,000 Separate financial statements for these two companies as of December 31, 2018, follow: $ Sander (950,000) 500.000 85,000 120.000 15,000 $ Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in earnings of Sander Net income Retained earnings 1/1/18 Net income Dividends declared Retained earnings 12/31/18 Cash Accounts receivable Inventory Investment in Sander Buildings and equipment Patents Plymouth $(1,740,000) 820.000 104,000 220.000 20,000 (124.000) (700,000) $(2,800,000) (700,000) 200,000 $ (3,300,000) 535,000 575,000 990.000 1.420.000 1,025.000 950,000 $ 5,495,000 450.000) (545,000) (900,000) (300,000) __(3,300,000) $(5,495,000) (230,000) (345,000) (230,000) 25,000 (550.000) 115,000 215,000 800,000 S Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings 12/31/18 Total liabilities and stockholders' equity 863.000 107,000 $2,100,000 $ (200,000) (450,000) (800,000) (100,000) (550,000) $(2,100,000) a. Prepare a schedule that calculates the Equity in Earnings of Sander account balance. b. Prepare a worksheet to arrive at consolidated figures for external reporting purposes. At year end, there are no intra- entity payables or receivables