The balance sheets of Forest Company and Garden Company are presented below as at December 31, Year 8.

BALANCE SHEETS At December 31, Year 8
		Forest			Garden
Cash	$	13,600		$	53,800
Receivables		25,600			91,674
Inventories		80,600			67,000
Investment in shares of Garden		243,900
Plant and equipment		740,600			465,000
Accumulated depreciation		(625,300)			(353,400)
Patents					9,500
Investment in bonds of Forest					58,426
	$	479,000		$	392,000
Current liabilities	$	59,244		$	53,600
Dividends payable		6,000			30,600
Bonds payable 6%		94,846
Common shares		200,000			150,000
Retained earnings		118,910			157,800
	$	479,000		$	392,000

Additional Information

• Forest acquired 90% of Garden for $243,900 on July 1, Year 1, and accounts for its investment under the cost method. At that time, the shareholders equity of Garden amounted to $180,000, the accumulated amortization was $100,000, and the assets of Garden were undervalued by the following amounts:

Inventory	$	17,000
Buildings	$	15,000		remaining life, 10 years
Patents	$	36,000		remaining life, 8 years

• During Year 8, Forest reported net income of $46,000 and declared dividends of $30,000, whereas Garden reported net income of $68,000 and declared dividends of $55,000.
• During Years 2 to 7, goodwill impairment losses totalled $2,200. An impairment test conducted in Year 8 indicated a further loss of $7,400.
• Forest sells goods to Garden on a regular basis at a gross profit of 30%. During Year 8, these sales totalled $150,600. On January 1, Year 8, the inventory of Garden contained goods purchased from Forest amounting to $18,600, while the December 31, Year 8, inventory contained goods purchased from Forest amounting to $22,600.
• On August 1, Year 6, Garden sold land to Forest at a profit of $18,600. During Year 8, Forest sold one-quarter of the land to an unrelated company.
• Forests bonds have a par value of $100,000, pay interest annually on December 31 at a stated rate of 6%, and mature on December 31, Year 11. Forest incurs an effective interest cost of 8% on these bonds. They had a carrying amount of $93,376 on January 1, Year 8. On that date, Garden acquired $60,000 of these bonds on the open market at a cost of $57,968. Garden will earn an effective rate of return of 7% on them. Both companies use the effective-interest method to account for their bonds.

The Year 8 income statements of the two companies show the following with respect to bond interest.

	Forest			Garden
Interest expense	$	7,470
Interest revenue				$	4,058

• Garden owes Forest $22,600 on open account on December 31, Year 8.
• Assume a 40% corporate tax rate and allocate bond gains (losses) between the two companies.

Prepare the following statements:

(i) Consolidated balance sheet (Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations and round your final answers to nearest dollar amount. The balance sheet total may vary due to rounding.)

(ii) Consolidated retained earnings statement (Input all values as positive numbers. Do not round intermediate calculations and round your final answers to nearest dollar amount. Omit $ sign in your response.)

Prepare the Year 8 journal entries that would be made on the books of Forest if the equity method was used to account for the investment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations and round your final answers to nearest dollar amount.)

Transaction list -

To record 90% of adjusted subsidiary income

To record 90% of Garden's dividend of $55,000

To record the adjustments to parent's net income.