Pavin acquires all of Stablers outstanding shares on January 1, 2015, for $630,000 in cash. Of this amount, $47,000 was attributed to equipment with a 5-year remaining life and $57,000 was assigned to trademarks expensed over a 10-year period. Pavin applies the partial equity method so that income is accrued each period based solely on the earnings reported by the subsidiary.

On January 1, 2018, Pavin reports $470,000 in bonds outstanding with a carrying amount of $435,200. Stabler purchases half of these bonds on the open market for $226,300.

During 2018, Pavin begins to sell merchandise to Stabler. During that year, inventory costing $111,000 was transferred at a price of $148,000. All but $27,000 (at sales price) of these goods were resold to outside parties by year-end. Stabler still owes $50,000 for inventory shipped from Pavin during December.

The following financial figures are for the two companies for the year ending December 31, 2018. Dividends were both declared and paid during the current year.

	Pavin				Stabler
Revenues	$	(791,000	)		$	(539,000	)
Cost of goods sold		472,000				257,000
Expenses		142,000				175,500
Interest expensebonds		53,000				0
Interest incomebond investment		0				(22,050	)
Loss on extinguishment of bonds		0				0
Equity in Stablers income		(128,550	)			0
Net income	$	(252,550	)		$	(128,550	)
Retained earnings, 1/1/18	$	(362,000	)		$	(395,000	)
Net income		(252,550	)			(128,550	)
Dividends paid		172,000				94,000
Retained earnings, 12/31/18	$	(442,550	)		$	(429,550	)
Cash and receivables	$	234,000			$	52,000
Inventory		192,000				104,000
Investment in Stabler		670,550				0
Investment in Pavin bonds		0				230,750
Land, buildings, and equipment (net)		262,000				558,000
Trademarks		0				0
Total assets	$	1,358,550			$	944,750
Accounts payable	$	(137,000	)		$	(261,200	)
Bonds payable		(470,000	)			(117,000	)
Discount on bonds		17,000				0
Common stock		(326,000	)			(137,000	)
Retained earnings (above)		(442,550	)			(429,550	)
Total liabilities and stockholders equity	$	(1,358,550	)		$	(944,750	)

Note: Credits are indicated by parentheses.

Consolidated Totals Accounts Revenues Cost of goods sold Expenses Interest expense-bonds Interest income-bond investment Loss on extinguishment of bonds Equity in income of Stabler Net income Retained earnings, 1/1/18 Retained earnings, 1/1/18 Net income Dividends paid Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Stabler Investment in Pavin Land, buildings, and equipment (net) Trademarks Total assets Accounts payable Bonds payable Discount on bonds Common stock Retained earnings Total liabilities and stockholders' equity PAVIN AND STABLER Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Pavin Stabler Debit Credit $ (791,000) $ (539,000) 472,000 257,000 142,000 175,500 53,000 (22,050) 0 0 (128,550) $ (252,550) $ (128,550) (362,000) (395,000) (252,550) (128,550) 172,000 94,000 $ (442,550) $ (429,550) 234,000 $ 52,000 192,000 104,000 670,550 230,750 262,000 558,000 0 01 $ 1,358,550 $ 944,750 (137,000) (261,200) (470,000) (117,000) 17,000 (326,000) (137,000) (442,550) (429,550) $ (1,358,550) $ (944,750) $ 0 $ 0 01 0 $