On January 1, 2020, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $383,400. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $226,700. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $255,600. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $88,000 and an unrecorded customer list (15-year remaining life) assessed at a $63,900 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 $138,300 112,800 to Stinson $172,875 150,400 2021 Ending Balance (at transfer price) $57,625 37,600 The individual financial statements for these two companies as of December 31, 2021, and the year then ended follow Sales McIlroy, Inc. $ (763,000) Stinson, Inc. $ (403,000) Cost of goods sold 501,500 Operating expenses 203,085 245,800 83,600 Equity in earnings in Stinson (38,449) B Net income $ (96,864) $ (73,600) Retained earnings, 1/1/21 $ (840,900) $ (286,200). -Net income (96,864) (73,600) Dividends declared 51,600 21,400 Retained earnings, 12/31/21 $ (886,164) $ (338,400) Cash and receivables $ 301,200 $ 154,100 Inventory 283,000 134,200 Investment in Stinson, 425,348 e Buildings (net) 374,000 208,700 Equipment (net) Patents (net) Total assets Liabilities 266,900 92,200 e 27,000 $ 1,650,448 $ 616,200 $ (464,284) $ (177,800) The individual financial statements for these two companies as of December 31, 2021, and the year then ended follow. Sales Cost of goods sold McIlroy, Inc. $ (763,000) 501,500 Operating expenses 203,085 Equity in earnings in Stinson (38,449) Stinson, Inc. $ (403,000) 245,800 83,600 e Net income Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 Cash and receivables $ (96,864) $ (73,600) $ (840,900) (96,864) 51,600 $ (286,200) (73,600) 21,400 $ (886,164) $ (338,400) $ 301,200 $ 154,100 Inventory Investment in Stinson 283,000 134,200 425,348 374,000 266,900 e 208,700 92,200 27,000 $ 1,650,448 $ 616,200 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.) $ (464,284) (300,000) (886,164) $(1,650,448) $ (177,800) (100,000) (338,400) $. (616,200) a. Show how Mcllroy determined the $425,348 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. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Show how McIlroy determined the $425,348 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.) Consideration transferred Increase in Stinson's retained earnings 1/1/20 to 1/1/21 Excess fair value amortization 2020 ending inventory profit deferral Mcllroy's equity in earnings of Stinson for 2021 383,400 $35,700 (7,836) (11,525) 16,339 38,449 (12,060) S 426,128 Stinson 2021 dividends declared to Mcllroy Investment account balance 12/31/21