On January 1, 2020, McIlroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $420,000. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $248,300. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $280,000. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $87,100 and an unrecorded customer list (15-year remaining life) assessed at a $63,000 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	$138,000	$172,500	$57,500
2021	112,800	150,400	37,600

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

	McIlroy, Inc.				Stinson, Inc.
Sales	$	(760,000	)		$	(399,000	)
Cost of goods sold		499,500				243,400
Operating expenses		202,710				82,800
Equity in earnings in Stinson		(38,034	)			0
Net income	$	(95,824	)		$	(72,800	)
Retained earnings, 1/1/21	$	(829,700	)		$	(286,100	)
Net income		(95,824	)			(72,800	)
Dividends declared		51,300				21,300
Retained earnings, 12/31/21	$	(874,224	)		$	(337,600	)
Cash and receivables	$	297,100			$	153,700
Inventory		279,100				133,900
Investment in Stinson		448,688				0
Buildings (net)		370,000				208,500
Equipment (net)		264,000				92,100
Patents (net)		0				26,800
Total assets	$	1,658,888			$	615,000
Liabilities	$	(484,664	)		$	(177,400	)
Common stock		(300,000	)			(100,000	)
Retained earnings, 12/31/21		(874,224	)			(337,600	)
Total liabilities and equities	$	(1,658,888	)		$	(615,000	)

(Note: Parentheses indicate a credit balance.)

1. Show how McIlroy determined the $448,688 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.