Pruitt Corporation owns 90% of the common stock of Sedbrook Company. The stock was purchased for $540,000 on January 1, 2012, when Sedbrook Company's retained earnings were $100,000. Preclosing trial balances for the two companies at December 31, 2016 are presented here:

	Pruit Corporation	Sedbrook Company
Cash	$83,000	$80,000
Accounts Receivable (net)	213,000	112,500
Inventory 1/1	150,000	110,000
Investments in Sedbrook Co.	568,250	400,000
Other Assets	100,000	30,000
Dividends Declared	850,000	350,000
Other Expenses	180,000	137,500
	$2,644,250	$1,220,000
Accounts Payable	$70,000	$30,000
Other Liabilities	75,000	40,000
Common Stock	800,000	500,000
Retained Earnings 1/1	532,000	120,000
Sales	1,100,000	530,000
Equity in Subsidiary Income	67,250
	$2,644,250	$1,220,000
Ending Inventory	$200,000	$120,000

The January 1, 2016 inventory of Sedbrook Company includes $30,000 of profit recorded by Pruit Corporation on 2015 sales. During 2016, Pruit Corporation made intercopany sales of $200,000 with a markup of 25% on cost. The ending inventory of Sedbrook Company includes goods purchased in 2016 from Pruitt for $50,000. Pruitt Corporation uses the complete equity method to record its investment in Sedbrook Company.

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