Pavin acquires all of Stablers outstanding shares on January 1, 2015, for $520,000 in cash. Of this amount, $36,000 was attributed to equipment with a 10-year remaining life and $46,000 was assigned to trademarks expensed over a 20-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 $360,000 in bonds outstanding with a carrying amount of $339,600. Stabler purchases half of these bonds on the open market for $174,900. During 2018, Pavin begins to sell merchandise to Stabler.

During that year, inventory costing $78,000 was transferred at a price of $104,000. All but $16,000 (at sales price) of these goods were resold to outside parties by year-end. Stabler still owes $39,000 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 $ (758,000 ) $ (517,000 )

Cost of goods sold 461,000 246,000

Expenses 131,000 164,500

Interest expensebonds 42,000 0

Interest incomebond investment 0 (20,400 )

Loss on extinguishment of bonds 0 0

Equity in Stablers income (126,900 ) 0

Net income $ (250,900 ) $ (126,900 )

Retained earnings, 1/1/18 $ (351,000 ) $ (373,000 )

Net income (250,900 ) (126,900 )

Dividends paid 161,000 83,000

Retained earnings, 12/31/18 $ (440,900 ) $ (416,900 )

Cash and receivables $ 223,000 $ 41,000

Inventory 181,000 93,000

Investment in Stabler 624,900 0

Investment in Pavin bonds 0 175,500

Land, buildings, and equipment (net) 251,000 547,000

Trademarks 0 0 Total assets $ 1,279,900 $ 856,500

Accounts payable $ (182,000 ) $ (207,600 )

Bonds payable (360,000 ) (106,000 )

Discount on bonds 18,000 0

Common stock (315,000 ) (126,000 )

Retained earnings (above) (440,900 ) (416,900 )

Total liabilities and stockholders equity $ (1,279,900 ) $ (856,500 )

Note: Credits are indicated by parentheses.

1. Prepare a worksheet to produce consolidated balances. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Consolidated Totals column should be entered with a minus sign.)