On January 1, 2020, McIlroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $334,800. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $197,900. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $223,200. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $86,200 and an unrecorded customer list (15-year remaining life) assessed at a $62,400 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	$137,700	$172,125	$57,375
2021	113,400	151,200	37,800

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

	McIlroy, Inc.				Stinson, Inc.
Sales	$	(757,000	)		$	(398,000	)
Cost of goods sold		497,500				242,800
Operating expenses		201,705				82,600
Equity in earnings in Stinson		(37,917	)			0
Net income	$	(95,712	)		$	(72,600	)
Retained earnings, 1/1/21	$	(838,200	)		$	(285,800	)
Net income		(95,712	)			(72,600	)
Dividends declared		50,900				21,100
Retained earnings, 12/31/21	$	(883,012	)		$	(337,300	)
Cash and receivables	$	300,500			$	153,600
Inventory		282,300				133,800
Investment in Stinson		393,654				0
Buildings (net)		366,000				208,300
Equipment (net)		261,100				91,800
Patents (net)		0				26,600
Total assets	$	1,603,554			$	614,100
Liabilities	$	(420,542	)		$	(176,800	)
Common stock		(300,000	)			(100,000	)
Retained earnings, 12/31/21		(883,012	)			(337,300	)
Total liabilities and equities	$	(1,603,554	)		$	(614,100	)

(Note: Parentheses indicate a credit balance.)

1. Show how McIlroy determined the $393,654 Investment in Stinson account balance. Assume that McIlroy defers 100 percent of downstream intra-entity profits against its share of Stinsons income.

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