On January 1, Year 1, Handy Company (Handy) purchased 70% of the outstanding common shares of Dandy Limited (Dandy) for $11,900. On that date, Dandys shareholders equity consisted of common shares of $1,150 and retained earnings of $6,300.

The financial statements for Handy and Dandy for Year 6 were as follows:

BALANCE SHEETS
at December 31, Year 6
		Handy			Dandy
Cash	$	1,520		$	960
Accounts receivable		2,980			1,230
Inventory		3,580			4,230
Property, plant, and equipmentnet		4,520			3,190
Investment in Dandy		7,000			0
Total	$	19,600		$	9,610
Current liabilities	$	4,500		$	620
Long-term liabilities		3,280			1,410
Common shares		1,180			430
Retained earnings		10,640			7,150
Total	$	19,600		$	9,610

STATEMENTS OF INCOME AND RETAINED EARNINGS
For Year Ended December 31, Year 6
		Handy			Dandy
Sales	$	22,800		$	8,340
Cost of sales		15,160			3,640
Gross profit		7,640			4,700
Other revenue		1,800			0
Selling and administrative expense		(1,020)			(600)
Other expenses		(5,500)			(2,220)
Income before income taxes		2,920			1,880
Income tax expense		1,000			820
Net income		1,920			1,060
Retained earnings, beginning of year		10,600			7,030
Dividends paid		(1,880)			(940)
Retained earnings, end of year	$	10,640		$	7,150

Additional Information
	In negotiating the purchase price at the date of acquisition, it was agreed that the fair values of all of Dandys assets and liabilities were equal to their carrying amounts, except for the following:

	Carrying Amount	Fair Value
Inventory	$2,280	$2,380
Equipment	2,680	3,180

	Both companies use FIFO to account for their inventory and the straight-line method for amortizing their property, plant, and equipment. Dandys equipment had a remaining useful life of 10 years at the acquisition date.
	Goodwill is not amortized on a systematic basis. However, each year, goodwill is evaluated to determine if there has been a permanent impairment. It was determined that goodwill on the consolidated balance sheet should be reported at its recoverable amount of $1,280 on December 31, Year 5, and $1,130 on December 31, Year 6.
	During Year 6, inventory sales from Dandy to Handy were $5,700. Handys inventories contained merchandise purchased from Dandy for $3,200 at December 31, Year 5, and $4,300 at December 31, Year 6. Dandy earns a gross margin of 50% on its intercompany sales.
	On January 1, Year 2, Handy sold some equipment to Dandy for $2,800 and recorded a gain of $360 before taxes. This equipment had a remaining useful life of eight years at the time of the purchase by Dandy.
	Handy charges $50 per month to Dandy for consulting services and has been doing so throughout Years 5 and 6.
	Handy uses the cost method of accounting for its long-term investment.
	Both companies pay taxes at the rate of 40%.
	Amortization expense is grouped with selling and administrative expenses, and impairment losses are grouped with other expenses.

Required:
(a)	Prepare a consolidated statement of income for the year ended December 31, Year 6.(Input all values as positive numbers.)

Handy Company
Consolidated Income Statement
Year 6
Sales	$
Cost of sales
Gross profit
Other revenue
Selling & administration expense
Other expenses
Income before income taxes
Income tax expense
Net income	$
Attributable to:
Shareholders of Handy
Non-controlling interest
	$

(b-1)

Calculate consolidated retained earnings at January 1, Year 6.

Consolidated retained earnings

$

(b-2)

Prepare a consolidated statement of retained earnings for the year ended December 31, Year 6.(Amounts to be deducted should be indicated by a minus sign.)

Handy Company
Consolidated Retained Earnings Statement
For the year ended December 31, Year 6
(Click to select)Retained earnings, Jan. 1Retained earnings, Dec. 31	$
(Click to select)Add: Net incomeLess: Net income
(Click to select)Add: Dividends paidLess: Dividends paid
(Click to select)Retained earnings, Dec. 31Retained earnings, Jan. 1	$

(c)	Not available in Connect.

(d)	Calculate goodwill impairment loss and non-controlling interest on the consolidated income statement for the year ended December 31, Year 6, under the parent company extension theory.(Input all values as positive numbers.)