The income statements for Paste Company and its subsidiaries, Waste Company and Baste Company, were prepared for the year ended December 31, Year 9, and are shown below. Paste Waste Baste Income Sales $460,000 $290,000 $196,000 Dividend Rent Total income Expenses 48,750 135,000 Interest 15,000 523,750 425,000 196,000 Cost of sales 305,000 168,000 144,000 General and administrative 98,000 53.000 34,000 Interest 15,000 Income tax 32,000 12,000 Total expenses Profit 435,000 316,000 $ 88,750 190,000 $109,000 $ 6,000 Additional Information Poste purchased its 80% interest in Waste on January 1, Year 4. On this date, Waste had a retained earnings balance of $45,000, and the acquisition differential amounting to $20,000 was allocated entirely to plant, with an estimated remaining life of eight years. The plant is used exclusively for manufacturing goods for resale. Paste purchased its 75% interest in Baste on December 31, Year 6. On this date, Baste had a retained earnings balance of $85,000. The acquisition differential amounting to $24,000 was allocated to goodwill; however, because Baste had failed to report adequate profits, the goodwill was entirely written off for consolidated purposes by the end of Year 8. Paste has established a policy that any intercompany sales will be made at a gross profit rate of 30%. On January 1, Year 9, the inventory of Paste contained goods purchased from Waste for $20,000. During Year 9, the following intercompany sales took place: Paste to Waste Waste to Baste Baste to Paste $ 95,000 175,000 155,000 On December 31, Year 9, the inventories of each of the three companies contained items purchased on an intercompany basis in the following amounts: Paste from Baste Waste from Paste Baste from Waste $65,000 27,000 65,000 In addition to its merchandising activities, Waste is in the office equipment rental business. Both Paste and Baste rent office equipment from Waste. General and administrative expenses for Paste and Baste include rent expense of $30,000 and $19,000, respectively. During Year 6, Waste paid $15,000 interest to Paste for intercompany advances. All of Paste's dividend revenue pertains to its investments in Waste and Baste. Retained earnings at December 31, Year 9, for Paste, Waste, and Baste were $708,750, $151,000, and $84,000, respectively. Paste Company uses the cost method to account for its investments, and uses tax allocation at a rate of 40% when it prepares consolidated financial statements. Required: (a) Prepare a consolidated income statement for Year 9. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Omit $ sign in your response.) Paste Company Consolidated Income Statement for the Year Ended December 31, Year 9 Sales Dividends Interest Rent Total income Cost of sales General and administrative Interest Income tax Total expenses Profit Attributable to: Shareholders of Paste Non-controlling interests $ $ (b) Calculate consolidated retained earnings at December 31, Year 9. (Omit $ sign in your response.) Consolidated retained earnings December 31, Year 9 (c) Assume that Paste is a private company, uses ASPE, and chooses to use the equity method. Calculate its income from investments for Year 9. (Omit $ sign in your response.) Investment income from subsidiaries $ (d) This part of the question is not part of your Connect assignment.