Pony Corporation acquired all of Stallion Companys common shares on January 1, 20X5, for $180,000. On that date, the book value of the net assets reported by Stallion was $150,000. The entire differential was assigned to depreciable assets with a six-year remaining economic life from January 1, 20X5. The adjusted trial balances for the two companies on December 31, 20X5, are as follows:

		Pony Corporation								Stallion Company
Item		Debit				Credit				Debit				Credit
Cash		$	15,000							$	5,000
Accounts Receivable			30,000								40,000
Inventory			70,000								60,000
Depreciable Assets (net)			325,000								225,000
Investment in Stallion Company			195,000
Depreciation Expense			25,000								15,000
Other Expenses			105,000								75,000
Dividends Declared			40,000								10,000
Accounts Payable						$	50,000							$	40,000
Notes Payable							100,000								120,000
Common Stock							200,000								100,000
Retained Earnings							230,000								50,000
Sales							200,000								120,000
Income from Stallion Company							25,000
		$	805,000			$	805,000			$	430,000			$	430,000

Pony uses the equity method in accounting for its investment in Stallion. Stallion declared and paid dividends on December 31, 20X5. Required: a. Prepare the consolidation entries needed as of December 31, 20X5, to complete a consolidation worksheet.

b. Prepare a three-part consolidation worksheet as of December 31, 20X5.

PONY CORPORATION AND SUBSIDIARY Consolidated Financial Statements Worksheet December 31, 20X5 Consolidation Entries Pony Corp. Stallion Co. DR CR Consolidated Income Statement Sales Less: Depreciation expense Less: Other expenses Income from Stallion Co Net income Statement of retained earnings Beginning balance Net income Less: Dividends declared Ending balance Assets Cash Accounts receivable Inventory Depreciable assets (net) Investment in Stallion Co Total assets Liabilities &Stockholder's Equity Accounts payable Notes payable Common stock Retained earnings Total Liabilities & Equity 0