Problem 3 (20 points)

On January 1, 2020, Porter Company purchased an 80% interest in the capital stock of Shilo Company for $3,400,000.At that time, Shilo Company had common stock of $2,200,000 and retained earnings of $620,000.Implied value of Shilo was $1,430,000 more than its book value.The book values of all assets and liabilities of Shilo Company were equal to their fair values on January 1, 2020 except land.Porter Company uses the cost method to record its investment in Shilo Company.Selected account balances of the two companies are given as below.

Required:Indicate the correct amounts of the selected accounts that should appear in the consolidated financial statements.

Account Balances As of December 31, 2021

Porter

Shilo

Consolidated

Company

Company

Amount

Sales

4,400,000

1,800,000

Dividends Declared

360,000

240,000

Investment in Shilo Company

3,400,000

0

Land

1,000,000

1,280,000

Common Stock

4,000,000

2,200,000