On January 1, 2023, Pulaski, Incorporated, acquired a 60 percent interest in the common stock of Sheridan, Incorporated, for $346,200. Sheridan's book value on that date consisted of common stock of $100,000 and retained earnings of $204,600. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $230,800. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $79,900 and also had unpatented technology (15-year estimated remaining life) undervalued by $55,800. 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	Cost to Pulaski	Transfer Price to Sheridan	Ending Balance (at transfer price)
2023	$ 129,000	$ 161,250	$ 53,750
2024	112,800	150,400	37,600

The individual financial statements for these two companies as of December 31, 2024, and the year then ended follow:

Items	Pulaski, Incorporated	Sheridan, Incorporated
Sales	$ (738,000)	$ (371,000)
Cost of goods sold	485,000	226,600
Operating expenses	198,860	77,200
Equity in earnings in Sheridan	(34,644)	0
Net income	$ (88,784)	$ (67,200)
Retained earnings, 1/1/24	$ (789,600)	$ (283,300)
Net income	(88,784)	(67,200)
Dividends declared	48,600	19,100
Retained earnings, 12/31/24	$ (829,784)	$ (331,400)
Cash and receivables	$ 282,900	$ 150,900
Inventory	265,700	131,500
Investment in Sheridan	398,828	0
Buildings (net)	343,000	205,700
Equipment (net)	244,900	89,600
Patents (net)	0	24,400
Total assets	$ 1,535,328	$ 602,100
Liabilities	$ (405,544)	$ (170,700)
Common stock	(300,000)	(100,000)
Retained earnings, 12/31/24	(829,784)	(331,400)
Total liabilities and equities	$ (1,535,328)	$ (602,100)

Note: Parentheses indicate a credit balance.

Required:

Show how Pulaski determined the $398,828 Investment in Sheridan account balance. Assume that Pulaski defers 100 percent of downstream intra-entity profits against its share of Sheridans income.

• Required A

Show how Pulaski determined the $398,828 Investment in Sheridan account balance. Assume that Pulaski defers 100 percent of downstream intra-entity profits against its share of Sheridans income.

Note: Amounts to be deducted should be indicated with a minus sign.

Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2024.

\begin{tabular}{|c|c|c|c|c|c|c|c|c|} \hline \multicolumn{9}{|c|}{ PULASKI, INCORPORATED, AND SHERIDAN, INCORPORATED } \\ \hline \multicolumn{9}{|c|}{ Consolidation Worksheet } \\ \hline \multicolumn{9}{|c|}{ For Year Ending December 31, 2024} \\ \hline & \multirow{2}{*}{\multicolumn{2}{|c|}{ Pulaski }} & \multirow{2}{*}{\multicolumn{2}{|c|}{ Sheridan }} & \multicolumn{2}{|c|}{ Consolidation Entries } & \multirow{3}{*}{\begin{tabular}{c} Noncontrolling \\ Interest \end{tabular}} & \multirow[b]{2}{*}{\begin{tabular}{c} Consolidated \\ Totals \end{tabular}} \\ \hline Accounts & & & & & Debit & Credit & & \\ \hline Sales & $ & (738,000) & $ & (371,000) & & & & \\ \hline Cost of goods sold & & 485,000 & & 226,600 & & & & \\ \hline Operating expenses & & 198,860 & & 77,200 & & & & \\ \hline Equity in earnings of Sheridan & & (34,644) & & 0 & & & & \\ \hline Separate company net income & & \begin{tabular}{l} (88,784) \\ \end{tabular} & & (67,200) & & & & \\ \hline \multicolumn{9}{|l|}{ Consolidated net income } \\ \hline \multicolumn{9}{|l|}{ To noncontrolling interest } \\ \hline \multicolumn{9}{|l|}{ To Pulaski, Incorporated } \\ \hline Retained earnings 1/1/24 & & (789,600) & & (283,300) & & & & \\ \hline Net income & & (88,784) & & (67,200) & & & & \\ \hline Dividends declared & & 48,600 & & 19,100 & & & & \\ \hline Retained earnings 12/31/24 & $ & (829,784) & $ & (331,400) & & & & \\ \hline Cash and receivables & & 282,900 & & 150,900 & & & & \\ \hline Inventory & & 265,700 & & 131,500 & & & & \\ \hline Investment in Sheridan & & 398,828 & & 0 & & & & \\ \hline Buildings (net) & & 343,000 & & 205,700 & & & & \\ \hline Equipment (net) & & 244,900 & & 89,600 & & & & \\ \hline Patents (net) & & 0 & & 24,400 & & & & \\ \hline \multicolumn{9}{|l|}{ Unpatented technology } \\ \hline \multicolumn{9}{|l|}{ Trade name } \\ \hline Total assets & $ & 1,535,328 & $ & 602,100 & & & & \\ \hline Liabilities & & (405,544) & & (170,700) & & & & \\ \hline Common stock & & (300,000) & & (100,000) & & & & \\ \hline \multicolumn{9}{|l|}{ Noncontrolling interest 1/1/24} \\ \hline \multicolumn{9}{|l|}{ Noncontrolling interest 12/31/24 } \\ \hline Retained earnings 12/31/24 & & (829,784) & & (331,400) & & & & \\ \hline Total liabilities and equities & $ & (1,535,328) & $ & (602,100) & & & & \\ \hline \end{tabular}