On January 1, two years ago, Parkway Corporation purchased all of the outstanding common stock of Shaw Company for $220,000 cash. On that date, Shaws net assets had a book value of $148,000. Equipment with an 8-year life was undervalued by $20,000 in Shaws financial records. Shaw has a database that is valued at $52,000 and will be amortized over ten years. Shaw reported net income of $25,000 in the year of acquisition and $32,500 in the following year. Dividends of $2,500 were declared and paid in each of those two years.

The third year of operations is now complete. For each of the two companies, selected account balances as of December 31 for this third year are as follows:

	Parkway	Shaw
Revenues	$ 250,000	$ 142,500
Expenses	175,000	100,000
Equipment (net)	125,000	60,000
Retained Earnings, beginning of the year	150,000	75,500
Dividend Paid	25,000	5,000

What is consolidated retained earnings at January 1 of the third year if the parent company uses the initial value method?

Multiple Choice

$191,100

$192,500

$150,000

$134,600

$187,100