On January 1, 2020, McIlroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $334,200. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $197,600. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $222,800. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $75,700 and an unrecorded customer list (15-year remaining life) assessed at a $51,300 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	$124,800	$156,000	$52,000
2021	112,500	150,000	37,500

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

	McIlroy, Inc.				Stinson, Inc.
Sales	$	(720,000	)		$	(357,000	)
Cost of goods sold		473,200				218,200
Operating expenses		194,415				74,400
Equity in earnings in Stinson		(33,071	)			0
Net income	$	(85,456	)		$	(64,400	)
Retained earnings, 1/1/21	$	(761,700	)		$	(281,800	)
Net income		(85,456	)			(64,400	)
Dividends declared		47,000				17,200
Retained earnings, 12/31/21	$	(800,156	)		$	(329,000	)
Cash and receivables	$	272,700			$	149,800
Inventory		256,100				130,600
Investment in Stinson		390,477				0
Buildings (net)		332,000				203,900
Equipment (net)		237,100				87,800
Patents (net)		0				22,300
Total assets	$	1,488,377			$	594,400
Liabilities	$	(388,221	)		$	(165,400	)
Common stock		(300,000	)			(100,000	)
Retained earnings, 12/31/21		(800,156	)			(329,000	)
Total liabilities and equities	$	(1,488,377	)		$	(594,400	)

(Note: Parentheses indicate a credit balance.)

1. Show how McIlroy determined the $390,477 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