On January 1, Year 2, PAT Ltd. acquired 90% of SAT Inc. when SAT's retained earnings were $1,000,000. There was no acquisition differential. PAT accounts for its investment under the cost method. SAT sells inventory to PAT on a regular basis at a markup of 30% of selling price. The intercompany sales were $160,000 in Year 2 and $190,000 in Year 3. The total amount owing by PAT related to these intercompany sales was $60,000 at the end of Year 2 and $50,000 at the end of Year 3. On January 1, Year 3, the inventory of PAT contained goods purchased from SAT amounting to $70,000, while the December 31, Year 3, inventory contained goods purchased from SAT amounting to $80,000. Both companies

pay income tax at the rate of 40%.

Selected account balances from the records of PAT and SAT for the year ended December 31, Year 3, were as follows:

PAT SAT

Inventory $510,000 $400,000

Accounts payable 700,000 420,000

Retained earnings, beginning of year 2,500,000 1,200,000

Sales 4,100,000 2,600,000

Cost of sales 3,200,000 1,800,000

Income tax expense 180,000 150,000

Required

(a) Determine the amount to report on the Year

3 consolidated financial statements for the

selected accounts noted above.