On January 1, 2020, McIlroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $346,200. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $204,600. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $230,800. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $79,900 and an unrecorded customer list (15-year remaining life) assessed at a $55,800 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)
2020	$129,000	$161,250	$53,750
2021	112,800	150,400	37,600

The indicated financial statements for these two companies as of December 31, 2021, at the year then ended follow:

-	McIlroy, Inc.	Stinson, Inc.
Sales	$ (738,000)	$ (371,000)
COGS	485,000	226,600
Operating Expenses	198,860	77,200
Equity in earnings in Stinson	(34,644)	0
- Net Income	$ (88,784)	$ (67,200)
Retained earnings, 1/1/21	$ (789,600)	$ (283,300)
Net income	(88,784)	(67,200)
Dividends declared	48,600	19,100
- Retained earnings, 12/31/21	$ (829,784)	$ (331,400)
Cash and receivables	$ 282,900	$ 150,900
Inventory	265,700	131,500
Investment in Stinson	398,828	0
Buildings (net)	343,000	205,700
Equipment (net)	244,900	89,600
Patents (net)	0	24,400
- Total assets	$ 1,535,328	$ 602,100
Liabilities	$ (405,544)	$ (170,700)
Common stock	(300,000)	(100,000)
Retained earnings 12/31/21	(829,784)	(331,400)
- Total liabilities and equity	$ (1,535,328)	$ (602,100)

(Note: Parenthesis indicate a credit balance)

a. Show how McIlroy determined the $398,828 investment in Stinson account balance. Assume that McIlroy defers 100 percent of downstream intra-entity profits against its share of Stinson's income.

b. Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2021.