On January 1, 2017, McIlroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $412,800. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $244,000. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $275,200. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $85,000 and an unrecorded customer list (15-year remaining life) assessed at a $61,200 fair value. Any remaining excess acquisition-date fair value was assigned to goodwill. Since acquisition, McIlroy has applied the equity method to its Investment in Stinson account and no goodwill impairment has occurred. 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 McIlroy Transfer Price to Stinson Ending Balance (at transfer price) 2017 $135,900 $169,875 $56,625 2018 112,800 150,400 37,600 The individual financial statements for these two companies as of December 31, 2018, and the year then ended follow: McIlroy, Inc. Stinson, Inc. Sales $ (753,000 ) $ (391,000 ) Cost of goods sold 494,900 238,600 Operating expenses 201,405 81,200 Equity in earnings in Stinson (37,097 ) 0 Net income $ (93,792 ) $ (71,200 ) Retained earnings, 1/1/18 $ (815,700 ) $ (285,400 ) Net income (93,792 ) (71,200 ) Dividends declared 50,400 20,600 Retained earnings, 12/31/18 $ (859,092 ) $ (336,000 ) Cash and receivables $ 292,100 $ 153,000 Inventory 274,400 133,300 Investment in Stinson 443,504 0 Buildings (net) 360,000 207,800 Equipment (net) 256,800 91,100 Patents (net) 0 26,100 Total assets $ 1,626,804 $ 611,300 Liabilities $ (467,712 ) $ (175,300 ) Common stock (300,000 ) (100,000 ) Retained earnings, 12/31/18 (859,092 ) (336,000 ) Total liabilities and equities $ (1,626,804 ) $ (611,300 ) Show how McIlroy determined the $443,504 Investment in Stinson account balance. Assume that McIlroy defers 100 percent of downstream intra-entity profits against its share of Stinsons income. Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2018.