On January 1, 2017, Panther, Inc., issued securities with a total fair value of $585,000 for 100 percent of Stark Corporation's outstanding ownership shares. Stark has long supplied inventory to Panther. The companies expect to achieve synergies with production scheduling and product development with this combination.

Although Stark's book value at the acquisition date was $327,000, the fair value of its trademarks was assessed to be $63,000 more than their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $195,000. The trademarks were considered to have indefinite lives, and the estimated remaining life of the patented technology was eight years.

In 2017, Stark sold Panther inventory costing $92,500 for $185,000. As of December 31, 2017, Panther had resold 79 percent of this inventory. In 2018, Panther bought from Stark $166,000 of inventory that had an original cost of $83,000. At the end of 2018, Panther held $44,800 (transfer price) of inventory acquired from Stark, all from its 2018 purchases.

During 2018, Panther sold Stark a parcel of land for $104,200 and recorded a gain of $18,600 on the sale. Stark still owes Panther $72,400 (current liability) related to the land sale.

At the end of 2018, Panther and Stark prepared the following statements in preparation for consolidation.

	Panther, Inc.				Stark Corporation
Revenues	$	(829,200	)		$	(381,000	)
Cost of goods sold		356,600				199,900
Other operating expenses		195,200				85,600
Gain on sale of land		(18,600	)			0
Equity in Stark's earnings		(49,550	)			0
Net income	$	(345,550	)		$	(95,500	)
Retained earnings 1/1/18	$	(375,000	)		$	(310,100	)
Net income		(345,550	)			(95,500	)
Dividends declared		94,400				33,500
Retained earnings 12/31/18	$	(626,150	)		$	(372,100	)
Cash and receivables	$	126,000			$	180,000
Inventory		383,800				128,200
Investment in Stark		723,000				0
Trademarks		0				67,500
Land, buildings, and equip. (net)		788,000				325,800
Patented technology		0				145,400
Total assets	$	2,020,800			$	846,900
Liabilities	$	(673,250	)		$	(292,150	)
Common stock		(400,000	)			(160,000	)
Additional paid-in capital		(321,400	)			(22,650	)
Retained earnings 12/31/18		(626,150	)			(372,100	)
Total liabilities and equity	$	(2,020,800	)		$	(846,900	)

1. Show how Panther computed its $49,550 equity in Stark's earnings balance.

2. Prepare a 2018 consolidated worksheet for Panther and Stark.