Pavin acquires all of Stablers outstanding shares on January 1, 2015, for $570,000 in cash. Of this amount, $41,000 was attributed to equipment with a 5-year remaining life and $51,000 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 $410,000 in bonds outstanding with a carrying amount of $377,600. Stabler purchases half of these bonds on the open market for $196,900.

During 2018, Pavin begins to sell merchandise to Stabler. During that year, inventory costing $124,000 was transferred at a price of $155,000. All but $21,000 (at sales price) of these goods were resold to outside parties by year-end. Stabler still owes $44,000 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 (773,000) 466,000 136,000 47,000 0 Stabler $ (527,000) 251,000 169,500 0 (18,150) 0 0 $ $ Revenues Cost of goods sold Expenses Interest expense-bonds Interest income-bond investment Loss on extinguishment of bonds Equity in Stabler's income Net income Retained earnings, 1/1/18 Net income Dividends paid Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Stabler Investment in Pavin bonds Land, buildings, and equipment (net) Trademarks Total assets Accounts payable Bonds payable Discount on bonds Common stock Retained earnings (above) Total liabilities and stockholders' equity (124,650) (248,650) (356,000) (248,650) 166,000 (438,650) 228,000 186,000 642,650 $ $ (124,650) $ (383,000) (124,650) 88,000 $ (419,650) $ 46,000 98,000 0 202, 250 552,000 $ 256,000 0 $ 1,312,650 (155,000) (410,000) 11,000 (320,000) (438,650) $ (1,312,650) $ 898, 250 $ (236,600) (111,000) 0 (131,000) (419, 650) $ (898, 250) Note: Credits are indicated by parentheses. PAVIN AND STABLER Consolidated Accounts Totals Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Pavin Stabler Debit Credit $ (773,000) $ (527,000) 466,000 251,000 136.000 169,500 47,000 0 0 (18.150) 0 0 0 $ (124,650) (248,650) $ (356,000) (124,650) $ 0 0 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 (248,650) 166,000 (438,650) (383,000) (124,650) 88,000 (419,650) $ $ $ 0 $ 228,000 $ 46,000 98,000 186,000 642,650 0 0 202,250 552,000 256,000 0 1,312,650 0 898,250 $ $ $ (236,600) (111,000) 0 (155,000) (410,000) 11,000 (320,000) (438,650) $ (1,312,650) Common stock (131,000) (419,650) (898,250) Retained earnings Total liabilities and stockholders' equity 0 $ $ 0 $ 0 $ 0 $ Pavin (773,000) 466,000 136,000 47,000 0 Stabler $ (527,000) 251,000 169,500 0 (18,150) 0 0 $ $ Revenues Cost of goods sold Expenses Interest expense-bonds Interest income-bond investment Loss on extinguishment of bonds Equity in Stabler's income Net income Retained earnings, 1/1/18 Net income Dividends paid Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Stabler Investment in Pavin bonds Land, buildings, and equipment (net) Trademarks Total assets Accounts payable Bonds payable Discount on bonds Common stock Retained earnings (above) Total liabilities and stockholders' equity (124,650) (248,650) (356,000) (248,650) 166,000 (438,650) 228,000 186,000 642,650 $ $ (124,650) $ (383,000) (124,650) 88,000 $ (419,650) $ 46,000 98,000 0 202, 250 552,000 $ 256,000 0 $ 1,312,650 (155,000) (410,000) 11,000 (320,000) (438,650) $ (1,312,650) $ 898, 250 $ (236,600) (111,000) 0 (131,000) (419, 650) $ (898, 250) Note: Credits are indicated by parentheses. PAVIN AND STABLER Consolidated Accounts Totals Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Pavin Stabler Debit Credit $ (773,000) $ (527,000) 466,000 251,000 136.000 169,500 47,000 0 0 (18.150) 0 0 0 $ (124,650) (248,650) $ (356,000) (124,650) $ 0 0 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 (248,650) 166,000 (438,650) (383,000) (124,650) 88,000 (419,650) $ $ $ 0 $ 228,000 $ 46,000 98,000 186,000 642,650 0 0 202,250 552,000 256,000 0 1,312,650 0 898,250 $ $ $ (236,600) (111,000) 0 (155,000) (410,000) 11,000 (320,000) (438,650) $ (1,312,650) Common stock (131,000) (419,650) (898,250) Retained earnings Total liabilities and stockholders' equity 0 $ $ 0 $ 0 $ 0