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 Credit Debit Credit Item Debit $ 5,000 40,000 Cash 15,000 Accounts Receivable 30,000 70,000 Inventory 60,000 Depreciable Assets (net) Investment in Stallion Company Depreciation Expense Other Expenses 325,000 225,000 195,000 15,000 75,000 25,000 105,000 Dividends Declared 40,000 10,000 Accounts Payable Notes Payable 50,000 $40,000 100,000 120,000 100,000 50,000 120,000 Common Stock 200,000 Retained Earnings 230,000 200,000 Sales 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Entry Credit Accounts Debit 1 Common stock 100,000 A Retained earnings 50,000 Income from Stallion Company 30,000 Investment in Stallion Company 170,000 10,000 Dividends declared 2 Depreciation expense 5,000 Income from Stallion Company 5,000 Depreciable assets 30,000 3 Accumulated depreciation 5,000 Investment in Stallion Company 25,000 PONY CORPORATION AND SUBSIDIARY Consolidated Financial Statements Worksheet December 31, 20X5 Consolidation Entries Pony Corp. Stallion Co. CR Consolidated DR Income Statement Sales Less: Depreciation expense 200,000 $ 120,000 320,000 5,000 (15,000) (45,000) (25,000) Less: Other expenses (105,000) (75,000) (180,000) Income from Stallion Co. 0 25,000 30,000 5,000 F Net income 95,000$ 95,000 30,000 35,000 5,000 Statement of retained earnings Beginning balance Net income 230,000 $ 50,000 $ 50,000 230,000 30,000 35,000 5,000 95,000 95,000 Less: Dividends declared (40,000) (10,000) (40,000) 10,000 Ending balance Assets $ $ 15,000 $ 285,000 70,000 $ 285,000 85,000 EA 15,000 $ Cash 5,000 20,000 Accounts receivable 70,000 30,000 40,000 Inventory Depreciable assets (net) Investment in Stallion Co. Total assets Liabilities & Stockholder's Equity Accounts payable 70,000 60,000 130,000 F 30,000 325,000 225,000 5,000 575,000 0 195,000 195,000 330,000 $ 200,000$ 635,000$ $ 795,000 30,000 50,000 $ 40,000 90,000 Notes payable 100,000 120,000 220,000 Common stock 100,000 200,000 200,000 100,000 Retained earnings Total Liabilities & Equity 70,000 285,000 285,000 85,000 F 15,000 F $ $ 635,000 330,000 185,000 15,000 795,000 EA Pony Corporation Stallion Company Credit Debit Credit Item Debit $ 5,000 40,000 Cash 15,000 Accounts Receivable 30,000 70,000 Inventory 60,000 Depreciable Assets (net) Investment in Stallion Company Depreciation Expense Other Expenses 325,000 225,000 195,000 15,000 75,000 25,000 105,000 Dividends Declared 40,000 10,000 Accounts Payable Notes Payable 50,000 $40,000 100,000 120,000 100,000 50,000 120,000 Common Stock 200,000 Retained Earnings 230,000 200,000 Sales 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Entry Credit Accounts Debit 1 Common stock 100,000 A Retained earnings 50,000 Income from Stallion Company 30,000 Investment in Stallion Company 170,000 10,000 Dividends declared 2 Depreciation expense 5,000 Income from Stallion Company 5,000 Depreciable assets 30,000 3 Accumulated depreciation 5,000 Investment in Stallion Company 25,000 PONY CORPORATION AND SUBSIDIARY Consolidated Financial Statements Worksheet December 31, 20X5 Consolidation Entries Pony Corp. Stallion Co. CR Consolidated DR Income Statement Sales Less: Depreciation expense 200,000 $ 120,000 320,000 5,000 (15,000) (45,000) (25,000) Less: Other expenses (105,000) (75,000) (180,000) Income from Stallion Co. 0 25,000 30,000 5,000 F Net income 95,000$ 95,000 30,000 35,000 5,000 Statement of retained earnings Beginning balance Net income 230,000 $ 50,000 $ 50,000 230,000 30,000 35,000 5,000 95,000 95,000 Less: Dividends declared (40,000) (10,000) (40,000) 10,000 Ending balance Assets $ $ 15,000 $ 285,000 70,000 $ 285,000 85,000 EA 15,000 $ Cash 5,000 20,000 Accounts receivable 70,000 30,000 40,000 Inventory Depreciable assets (net) Investment in Stallion Co. Total assets Liabilities & Stockholder's Equity Accounts payable 70,000 60,000 130,000 F 30,000 325,000 225,000 5,000 575,000 0 195,000 195,000 330,000 $ 200,000$ 635,000$ $ 795,000 30,000 50,000 $ 40,000 90,000 Notes payable 100,000 120,000 220,000 Common stock 100,000 200,000 200,000 100,000 Retained earnings Total Liabilities & Equity 70,000 285,000 285,000 85,000 F 15,000 F $ $ 635,000 330,000 185,000 15,000 795,000 EA