Penn Corporation purchased 80 percent ownership of State Company on January 1, 20X2, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of State. On January 1, 20X4, Penn sold 2,000 shares of State's stock for $65,000 to Nonaffiliated Company and recorded a $12,000 increase in additional paid-in capital. Trial balances for the companies on December 31, 20X4, contain the following data:

	Penn Corporation							State Company
	Debit			Credit				Debit			Credit
Cash	$	32,000						$	37,000
Accounts Receivable		75,000							55,000
Inventory		127,000							107,000
Buildings & Equipment		700,000							250,000
Investment in State Company		171,600
Cost of Goods Sold		206,000							96,000
Depreciation Expense		21,000							16,000
Other Expenses		30,000							34,000
Dividends Declared		20,000							15,000
Accumulated Depreciation				$	166,000						$	91,000
Accounts Payable					245,200							51,000
Bonds Payable					155,000							21,000
Common Stock ($10 par)					200,000							100,000
Additional Paid-In Capital					69,000							27,000
Retained Earnings					255,000							140,000
Sales					272,000							180,000
Income from State					20,400
Total	$	1,382,600		$	1,382,600			$	610,000		$	610,000

State's net income was earned evenly throughout the year. Both companies declared and paid their dividends on December 31, 20X4. Penn uses the equity method in accounting for its investment in State. b. Prepare a consolidation worksheet for 20X4. I have gotten it started.

PENN CORPORATION AND SUBSIDIARY
Consolidated Financial Statement Worksheet
December 31, 20X4
			Consolidation Entries
	Penn Corp.	State Co.	DR	CR	Consolidated
Income Statement
Sales	272,000	180,000			452,000
Less: COGS	(206,000)	(96,000)			(302,000)
Less: Depreciation Expense	(21,000)	(16,000)			(37,000)
Less: Other Expenses	(30,000)	(34,000)			(64,000)
Income from State Co.	20,400		20,400		0
Consolidated Net Income	35,400	34,000	20,400	0	49,000
NCI in Net Income			13,600		(13,600)
Controlling Interest in NI	35,400	34,000	34,000	0	35,400
Statement of Retained Earnings
Beginning Balance	255,000	140,000			395,000
Net Income	35,400	34,000	34,000		35,400
Less: Dividends Declared	20,000	15,000			35,000
Ending Balance	310,400	189,000	34,000	0	465,400
Balance Sheet
Cash	32,000	37,000			69,000
Accounts Receivable	75,000	55,000			130,000
Inventory	127,000	107,000			234,000
Buildings and Equipment	700,000	250,000			950,000
Less: Accumulated Depreciation	(166,000)	(91,000)			(257,000)
Investment in State Co.	171,600			171,600	0
Total Assets	939,600	358,000	0	171,600	1,126,000
Accounts Payable	245,200	51,000			296,200
Bonds Payable	155,000	21,000			176,000
Common Stock	200,000	100,000			300,000
Additional Paid-In Capital	69,000	27,000			96,000
Retained Earnings	310,400	189,000	34,000	0
NCI in NA of State Co.
Total Liabilities & Equity	979,600	388,000	34,000	0	868,200