Parent purchased subsidiary on January 1,2014. The excess of investment cost over book value of $210,000 was allocated entirely to a 10 year royalty agreement.

1. Parent purchased Subsidiary on January 1, 2014. The excess of investment cost over book value of $210,000 was allocated entirely to a 10-year royalty agreement. Subsidiary regularty sells merchandise to Parent. In 2015, inter-company sales amounted to $123,980, with $27,558 of deferred profit remaining in ending inventory. Year-end inter-company receivables/payables amounted to $40,300 In 2016, 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, 2016 are presented below. $ 9,864,000 $3,718,800 Cost of Goods Sold Gross Profit 2,959,200 (1,874,160) 1,487,520 (966,888) 5 1.325 800 520.52 Net Income Earnings, 1/1/16 Net income Dividends Retained Earnings, 12/31/16 4,955,674 1,576,900 $1,921,380 520,632 (67,682) Cash and receivables Inventory Equity Investment Property, Plant & Equipment (Net) Total Assets s 2,557,242 1,913,616 3,043,826 $2,064,790 1,108,202 2.050.300 Accrued liabilities Notes payable Common stock Additional paid-in capital Retained Earnings, 12/31/16 Total Liabilities and Equities s 1,341,706 1,513,051 4,200,000 1,612,764 1,821.432 $ 443,876 607,660 1,239,600 125,280 432,546 $5,223,292 a. Prepare a schedule showing the computation of Equity Income on Parent's books for 2016 Prepare a schedule showing the computation of Equity Investment on Parent's books at December 31, 2016. c. Prepare the consolidating Worksheet ated Parent Subsidary Sales Reanue 2.959 200 00 $1,487,520 00 $0. 74, 160 0013 006 888 001 Operaing Expenses Equity Income Net Income 491,860.00 1,576,800.00 520 632.00 Retained Eamings, 1t6 Net income Didends Reained Eamings, 1231/18 1,921, 380.00 1,576,900 52063200 001,758 00) (67. 682 00 6.230,816.00 2,374,330 .00 Cash and recehables entony Equity Inestment 2,557,242 00 2,084,70.00 $ 1.9135% 00 $ 1,108,202 00 3,043,826 00 Property, Plant & Equipment (Ne) $ 9.206,065.00 2,050,300.00 Total Assets $16,719,709.00 5,223,.292.00 Accounts payable Accrved liabilities Notes payable Common stock Additional paid-n captal Retained Eamings, 123/16 Total Liablities and Equiies 1,341,706.00 443,876.00 1,513.051.00 607,60.00 4200,000.00 $1,239.800.00 1,012764.00 125,200.00 1,821,432 00432.548.00 6.230,816.00 $2,374,330.00 $16.718,769.00 $5,223,292.00