Q2. (30 points, Partial Equity Method): Pitts Company owns 80% of the common stock of Shannon Company. The stock was purchased for $960,000 on January 1, 2012, when Shannon Company's retained earnings were $675,000 and Common stock was 525,000. BV of Shannon is equal to its FV on the acquisition date. On January 1, 2014, Shannon Company sold fixed assets to Pitts Company for $490; Shannon Company had purchased these assets for $930,000 on September 1, 2010, at which time their estimated useful life was 10 1/3 years (zero residual value). The estimated remaining useful life to Pitts Company on 1/1/14 is 7 years. Both companies employ the straight-line method of depreciation. There has been no intracompany sales of merchandise between Pitss Co and Shannon Co. Pitts Company Net income Dividend Shannon Company Net income Dividend Year 2015 435,000 150,000 300,000 75,000 Pitts Company Shannon Company Retained Earnings 1/1/2015 1,215,000 1,038,000 Determine Retained Earnings balance (12/31/2015) on the consolidated balance sheets