Portly Company, and Stout, Inc. a 80% owned subsidiary, engage in extensive intercompany transactions involving raw materials, component parts, and completed products.

Portly Company purchased its interest in Stout, Inc. (80% ) several years ago at book value, and carries the investment account at equity. Intercompany sales for the year ended December 31, 2017,and the uncomfirmed intercompany profits in the beginning and ending inventories of both companies are summarized below:

	Portly Company	Stout, Inc.
december 31 2016
intercomp profit in invent	134,400	126,000
intercompany sales to affiliate	3,840,000	3,360,000
December 31, 2017
intecompany profit in inventory	105,600	97,440

The individual unconsolidated financial statements for both companies for the year ended December 31, 2017, are shown below

Balance Sheet
	Portly Company	Stout, Inc.
Assets
Inventory	2,250,000	1,750,000
Other Assets	10,500,000	7,000,000
Investment in Sub.	4,258,080
Total Assets	17,008,080	8,750,000
Liabilities	7,016,480	3,200,000
Capital Stock	240,000	1,000,000
Retained Earnings	9,751,600	4,550,000
Total L & E	17,008,080	8,750,000
Income Statement 2017
-	Portly Company	Stout, Inc.
Sales	16,000,000	12,000,000
Income From Sub.	1,851,600
Total Rev	17,851,600	12,000,000
Cost of Goods Sold	9,000,000	7,000,000
Operating Expenses	3,500,000	2,750,000
Total Expenses	12,500,000	9,750,000
Net Income	5,351,600	2,250,000
Statement of Retained Earnings
-	Portly Company	Stout, Inc.
Beginning Balance	5,750,000	3,500,000
Add: Net Income	5,351,600	2,250,000
Deduct: Dividends	1,350,000	1,200,000
Ending Balance	9,751,600	4,550,000

The last column, the final column of the 'phantom' books, of Portly Company's working paper prepared for December 30, 2016, is shown as follows:

Portly Company and Subsidiary Stout, Inc.
CONSOLIDATED FINANCIAL STATEMENT WORKING PAPER
For the year ended December 31, 2016
		OPENING
		ELIMINATION
ACCOUNTS		ENTRY
INCOME STATEMENT
-
Sales		0
Income From Sub.		0
Total Revenue
Cost of Goods Sold		(260,400)
Operating Expenses		0
Noncontrolling Interest		0
Total Expenses
Net Income
STATEMENT OF
RETAINED EARNINGS
-
Begining Balance		3,500,000
Add: Net Income		0
Deduct: Dividends		0
Ending Balance
BALANCE SHEET
-
ASSETS
Inventory		0
Other Assets		0
Investment in Sub.		(3,366,480)
Total Assets
LIABILITIES &
EQUITY
Liabilities		0
Capital Stock		1,000,000
Retained Earnings		0
Total Lbts.&Eqty.		0
Noncontrolling Interest		(873,120)

1 Using the above data prepare a consolidated worksheet for the period ending December 31, 2017. Include a subschedule to calculate the equity method subsidiary income for the period.

2 Assume that you did not have the last column from the phantom books with which to prepare eliminating entries (a). Set up schedules to demonstrate that all letter (a) entry amounts could be derived from other numbers already in the problem. In other words, set up schedules to support all debits and credits for the letter (a) eliminating entry.