On January 1, 2020, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $362,400. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $214,200. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $241,600. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $82,600 and an unrecorded customer list (15-year remaining life) assessed at a $57,900 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: Year Cost to McIlroy 2020 Transfer Price to Stinson $165,000 150,800 2021 $132,000 113,100 Ending Balance (at transfer price) $55,000 37,700 The individual financial statements for these two companies as of December 31, 2021, and the year then ended follow: Sales McIlroy, Inc. $ (745,000) Stinson, Inc. Cost of goods sold 489,600 Operating expenses 200,495 Equity in earnings in Stinson (35,463) $ (378,000) 230,800 78,600 0 Net income $ (90,368) $ (68,600) Retained earnings, 1/1/21 $ (800,900) $ (284,100) Net income Dividends declared (90,368) 49,300 (68,600) 19,800 Retained earnings, 12/31/21 $ (841,968) $ (332,900) Cash and receivables $ 286,900 $ 151,500 Inventory 269,500 132,100 Investment in Stinson 409,651 Buildings (net) 350,000 249,800 206,800 90,300 0 25,200 $ 605,900 Equipment (net) Patents (net) Total assets Liabilities Common stock Retained earnings, 12/31/21 Total liabilities and equities (Note: Parentheses indicate a credit balance.) $ 1,565,851 $ (423,883) (300,000) (841,968) $ (1,565,851) $ (173,000) (100,000) (332,900) $ (605,900) a. Show how Mcllroy determined the $409,651 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.