On January 1, 2023, Pulaski, Incorporated, acquired a 60 percent interest in the common stock of Sheridan, Incorporated, for $384,600. Sheridan's book value on that date consisted of common stock of $100,000 and retained earnings of $227,300. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $256,400. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $83,800 and also had unpatented technology (15- year estimated remaining life) undervalued by $59,700. Any remaining excess acquisition-date fair value was assigned to an indefinite- lived trade name. Since acquisition, Pulaski has applied the equity method to its Investment in Sheridan account. 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 2023 2024 Cost to Pulaski $ 133,800 112,500 Transfer Price to Sheridan $ 167,250 150,000 Ending Balance (at transfer price) $ 55,750 37,500 The individual financial statements for these two companies as of December 31, 2024, and the year then ended follow: Items Sales Cost of goods sold Operating expenses Equity in earnings in Sheridan Net income Retained earnings, 1/1/24 Net income Dividends declared Retained earnings, 12/31/24 Cash and receivables Inventory Investment in Sheridan Buildings (net) Retained earnings, 12/31/24 Pulaski, Incorporated $ (749,000) 492,200 200,935 (36,359) $ (92,224) $ (810,300) (92,224) 50,100 $ (852,424) $ 290,200 272,600 424,713 355,000 253,300 0 $ 1,595,813 $ (443,389) (300,000) (852,424) Sheridan, Incorporated $ (385,000) 235,000 80,000 0 $ (70,000) $ (284,600) (70,000) 20,100 $ (334,500) $ 152,300 132,700 0 207,500 90,800 25,500 $ 608,800 $ (174,300) (100,000) (334,500) Equipment (net) Patents (net) Total assets Liabilities Common stock Total liabilities and equities Note: Parentheses indicate a credit balance. Required: $ (1,595,813) $ (608,800) a. Show how Pulaski determined the $424,713 Investment in Sheridan account balance. Assume that Pulaski defers 100 percent of downstream intra-entity profits against its share of Sheridan's income. b. Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2024. Required A Required B Show how Pulaski determined the $424,713 Investment in Sheridan account balance. Assume that Pulaski defers 100 percent of downstream intra-entity profits against its share of Sheridan's income. Note: Amounts to be deducted should be indicated with a minus sign. Consideration transferred 2023 ending inventory profit deferral Excess fair value amortization Increase in Sheridan's retained earnings 1/1/23 to 1/1/24 Pulaski's equity in earnings of Stinson for 2024 Sheridan 2024 dividends declared to Pulaski Investment account balance 12/31/24 0 $ 0 Required A Required B > Kequired A Kequired b Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2024. Note: For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as Show more PULASKI, INCORPORATED, AND SHERIDAN, INCORPORATED Consolidation Worksheet For Year Ending December 31, 2024 Consolidation Entries Accounts Pulaski Sheridan Debit Credit Noncontrolling Interest Consolidated Totals Sales S (749,000) $ (385,000) Cost of goods sold 492,200 235,000 Operating expenses 200,935 80,000 Equity in earnings of Sheridan (36,359) 0 Separate company net income (92,224) (70,000) Consolidated net income To noncontrolling interest To Pulaski, Incorporated Retained earnings 1/1/24 Net income (810,300) (284,600) (92,224) (70,000) Dividends declared 50,100 20,100 Retained earnings 12/31/24 S (852,424) $ (334,500) Cash and receivables S 290,200 $ 152,300 Inventory 272,600 132,700 Investment in Sheridan 424,713 0 Buildings (net) 355,000 207,500 253,300 90,800 0 25,500 Equipment (net) Patents (net) Unpatented technology Trade name Total assets Liabilities Common stock Noncontrolling interest 1/1/24 Noncontrolling interest 12/31/24 Retained earnings 12/31/24 Total liabilities and equities S 1,595,813 $ (443,389) (300,000) 608,800 (174,300) (100,000) (852,424) (334,500) $ (1,595,813) $ (608,800) 0 0