QUESTION4 Not changed since last attempt Marked out of 22.00 P Flag question Determining ending consolidated balances in the second year following the acquisition-Cost method Assume a parent company acquired a subsidiary on January 1, 2015, for $2,186,000. The purchase price was $1,066,200 in excess of the subsidiary's $1,119,800 book value of Stockholders' Equity on the acquisition date. Of this excess purchase price, $602,000 was assigned to Property, plant and equipment with a remaining economic useful life of 10 years, and $464,200 was assigned to Goodwill. On the acquisition date, the subsidiary reported retained earnings equal to $847,550. The parent uses the cost method of pre-consolidation Equity investment bookkeeping. The financial statements of the parent and its subsidiary for the year ended December 31, 2016, are as follows: Parent Subsidiary Parent Subsidiary Income statement Sales Cost of goods sold Gross profit Equity income Operating expenses Balance sheet $8,318,750 $1,900,000 Assets (5,989,500) (1,089,000) Cash $1,567,280 $468,600 2,462,900 421,300 3,476,850 540,650 2,329,250 811,000 Accounts receivable 37,400 1,247,840 (556,900) Equity investment $1,118,810 $254,100 Property, plant & Inventory 2,186,000 Net income 17,189,920 1,000,450 $26,882,950 $2,431,000 Statement of retained earnings BOY retained earnings Net income Dividends 5,801,070 937,750 Liabilities and stockholders' equity 1,118,810 254,100 Accounts payable (262,570) 37400) Accrued liabilities $1,217,920 $173,030 1,447,270 226,270 10,587,500 605,000 1,025,060 21,000 5,947,890 151,250 6,657,310 1,154,450 $26,882,950 $2,431,000 Ending retained earnings S6,657,310 $1,154450 Long-term liabilities Common stock Retained earnings