Pommu Corporation paid $78,000 for a 60% interest in Schtick Inc. on January 1, 2014, when Schtick's Capital Stock was $80,000 and its Retained Earnings $20,000. The fair values of Schtick's identifiable assets and liabilities were the same as the recorded book values on the acquisition date. Trial balances at the end of the year on December 31, 2014 are given below:
 
                                                             Pommu             Schtick
Cash                                                       $4,500             $20,000
Accounts Receivable                               24,000               30,000
Inventory                                               100,000               70,000
Investment in Schtick                               78,000
Cost of Goods Sold                                71,500               50,000
Operating Expenses                                22,000               37,000
Dividends                                               15,000               10,000
                                                           $315,000           $217,000
 
Liabilities                                               $47,000             $27,000
Capital stock, $10 par value                   100,000               80,000
Additional Paid-in Capital                         11,000
Retained Earnings                                   31,000               20,000
Sales Revenue                                       120,000               90,000
Dividend Income                                       6,000                     
                                                           $315,000           $217,000
 
During 2014, Pommu made only two journal entries with respect to its investment in Schtick. On January 1, 2014, it debited the Investment in Schtick account for $78,000 and on November 1, 2014, it credited Dividend Income for $6,000.
 
Part 1:  Prepare a consolidated income statement and a statement of retained earnings for Pommu and Subsidiary for the year ended December 31, 2014.
 
Part 2:  Prepare a consolidated balance sheet for Pommu and Subsidiary as of December 31, 2014.