On January 1, 2020, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $412,800. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $244,000. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $275,200. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $85,000 and an unrecorded customer list (15-year remaining life) assessed at a $61,200 fair value. Any remaining excess acquisition-date fair value was assigned to goodwill. Since acquisition, Mcllroy 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: Transfer Price Year Cost to McIlroy 2020 $135,900 2021 112,800 to Stinson $169,875 150,400 Ending Balance (at transfer price) $56,625 37,600 The individual financial statements for these two companies as of December 31, 2021, and the year then ended follow: Sales Cost of goods sold Operating expenses Equity in earnings in Stinson Net income Retained earnings, 1/1/21 Net income Dividends declared McIlroy, Inc. $ (753,000) 494,900 201,405 (37,097) $ (391,000) 238,600 81,200 0 $ (93,792) $ (71,200) $ (285,400) Stinson, Inc. Retained earnings, 12/31/21 $ (859,092) Cash and receivables $ 292,100 Inventory Investment in Stinson 274,400 $ (815,700) (93,792) 50,400 (71,200) 20,600 $ (336,000) $ 153,000 133,300 443,504 0 Buildings (net) Equipment (net) Patents (net) Total assets Liabilities Common stock Retained earnings, 12/31/21 Total liabilities and equities (Note: Parentheses indicate a credit balance.) $ (467,712) (300,000) (859,092) $(1,626,804) $ (175,300) (100,000) (336,000) $ (611,300) 360,000 207,800 256,800 91,100 0 26,100 $ 1,626,804 $ 611,300 a. Show how Mcllroy determined the $443,504 Investment in Stinson account balance. Assume that Mcllroy 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. Complete this question by entering your answers in the tabs below. Required A Required B Show how McIlroy determined the $443,504 Investment in Stinson account balance. Assume that McIlroy defers 100 percent of downstream intra-entity profits against its share of Stinson's income. (Amounts to be deducted should be indicated with a minus sign.) 0 $ 0 < Required A Required B > Complete this question by entering your answers in the tabs below. Required A Required B Show how McIlroy determined the $443,504 Investment in Stinson account balance. Assume that McIlroy defers 100 percent of downstream intra-entity profits against its share of Stinson's income. (Amounts to be deducted should be indicated with a minus sign.) 2020 ending inventory profit deferral Consideration transferred Excess fair value amortization Increase in Stinson's retained earnings 1/1/20 to 1/1/21 0 Investment account balance 12/31/21 $ 0 McIlroy's equity in earnings of Stinson for 2021 Required A Required B > MCILROY, INC., AND STINSON, INC. Consolidation Worksheet For Year Ending December 31, 2021 Consolidation Entries Accounts Mcllroy Stinson Debit Sales $ (753,000) $ (391,000) Cost of goods sold 494,900 238,600 Operating expenses 201,405 81,200 Equity in earnings of Stinson (37,097) Separate company net income (93,792) (71,200) Consolidated net income To noncontrolling interest To Mcllroy, Inc. Retained earnings 1/1/21 (815,700) (285,400) Net income (93,792) (71,200) Dividends declared 50,400 20,600 Retained earnings 12/31/21 $ (859,092) $ (336,000) Cash and receivables $ 292,100 $ 153,000 Inventory 274,400 133,300 Investment in Stinson 443,504 0 360,000 207,800 256,800 91,100 0 26,100 Buildings (net) Equipment (net) Patents (net) Customer list Goodwill Total assets Liabilities Common stock Noncontrolling interest 1/1/21 Noncontrolling interest 12/31/21 Retained earnings 12/31/21 Total liabilities and equities $ 1,626,804 $ 611,300 (467,712) (175,300) (300,000) (100,000) Credit NCI Consolidated Totals (859,092) $ (1,626,804) $ (336,000) (611,300) $ 0 $ 0