On January 1, Year 4, Grant Corporation bought 48,000(80%) of the outstanding common shares of Lee Company for $420,000 cash. Lee's shares were trading for $7 per share on the date of acquisition. On that date, Lee had $150,000 of common shares outstanding and \$180,000 retained earnings. Also on that date, the carrying amount of each of Lee's identifiable assets and liabilities was equal to its fair value except for the following: The patent had an estimated useful life of five years at January 1 , Year 4 , and the entire inventory was sold during Year 4. Grant uses the cost method to account for its investment. The following are the separate-entity financial statements of Grant and Lee as at December 31, Year 7: BALANCE SHEETS At December 31, Year 7 Grant Lee Assets Cash $30,000$108,000 Accounts receivable 1,110,000492,000 Inventory 1,860,000600,000 Investment in Lee 420,000 Equipment, net 1,380,0001,230,000 Patent, net Liabilities and Shareholders' Equity Accounts payable $1,140,000$1,170,000 Other accrued liabilities 360,000300,000 Income taxes payable 480,000432,000 Common shares 1,020,000150,000 Retained earnings $4,800,0001,800,000$2,442,000390,000 Additional Information - The recoverable amount for goodwill was determined to be $60,000 on December 31 , Year 7 . The goodwill impairment loss occurred in Year 7. - Grant's accounts receivable contains $180.000 owina from Lee. Additional Information - The recoverable amount for goodwill was determined to be $60,000 on December 31 , Year 7 . The goodwill impairment loss occurred in Year 7. - Grant's accounts receivable contains $180,000 owing from Lee. - Amortization expense is grouped with distribution expenses and impairment losses are grouped with other expenses. Required: (a) Calculate consolidated retained earnings at December 31, Year 7. (Input all values as positive numbers. Omit $ sign in your response.) Omit $ sign in your response.) (b) Prepare consolidated financial statements for Year 7. (Input all values as positive numbers.) Grant Corporation Consolidated Income Statement Year ended December 31, Year 7 \begin{tabular}{|c|c|} \hline \multicolumn{2}{|c|}{ Grant Corporation } \\ \hline Consolidated Balance Sheet - December 31, Year 7 \\ \hline Assets & \\ \hline & \\ \hline & \\ \hline & \\ \hline & \\ \hline & \\ \hline & \\ \hline & \\ \hline & \\ \hline & \\ \hline & \\ \hline & \\ \hline \end{tabular}