Parent purchased Subsidiary on January 1, 2011. The excess of investment cost over book value of $210,000 was allocated entirely to a 10-year royalty agreement.

Subsidiary regularly sells merchandise to Parent. In 2012, inter-company sales amounted to $123,960, with $27,558 of deferred profit remaining in ending inventory. Year-end inter-company receivables/payables amounted to $40,300.

In 2013, inter-company sales amounted to $123,960 with $35,330 of deferred profit remaining in ending inventory. Year-end inter-company receivables/payables amounted to $49,584

Financial statements of Parent and Subsidiary for the year ended December 31, 2013 are presented below.

	Parent	Subsidiary
Sales Revenue	$9,864,000	$1,859,400
Cost of Goods Sold	-6,904,800	1,115,640
Gross Profit	2,959,200	743,760
Operating Expenses	-1,874,160	-483,444
Equity Income	231,544	_
Net Income	$1,316,584	$260,316
Retained Earnings, 1/1/13	$4,955,674	$960,690
Net income	1,316,584	260,316
Dividends	-301,758	-33,841
Retained Earnings, 12/31/13	$5,970,500	$1,187,165
Cash and receivables	$2,557,242	$1,032,395
Inventory	1,913,616	554,101
Equity Investment	1,577,748
Property, Plant & Equipment (Net)	9,205,085	1,025,150
Total Assets	$15,253,691	$2,611,646
Accounts payable	$738,825	$221,938
Accrued liabilities	910,170	303,830
Notes payable	4,200,000	619,800
Common stock	1,612,764	62,640
Additional paid-in capital	1,821,432	216,273
Retained Earnings, 12/31/13	5,970,500	1,187,165
Total Liabilities and Equities	$15,253,691	$2,611,646

a. Prepare a schedule showing the computation of Equity Income on Parent's books for 2013.

b. Prepare a schedule showing the computation of Equity Investment on Parent's books at December 31, 2013.

c. Prepare the consolidation entries (or post consolidation adjustment entries in worksheets format) for 2013.