The individual financial statements for Patterson Company and Shapiro Company for the year ending December 31, 2023, follow. Patterson acquired a 60 percent interest in Shapiro on January 1, 2020, in exchange for various considerations totaling $570,000. At the acquisition date, the fair value of the noncontrolling interest was $380,000 and Shapiro's book value was $730,000. Shapiro had developed internally a customer list that was not recorded on its books but had an acquisition-date fair value of $220,000. This intangible asset is being amortized over 20 years. Patterson uses the equity method to maintain its Investment in Shapiro account. Shapiro regularly transfers inventory to Patterson. In 2022, it shipped inventory costing $100,000 to Patterson at a price of $150,000. During 2023, intra-entity shipments totaled $200,000, although the original cost to Shapiro was only $140,000. In each of these years, 30 percent of the merchandise was not resold to outside parties until the period following the transfer. Patterson owed Shapiro $40,000 at the end of 2023 (i.e., intra-entity payables). Accounts Sales Patterson (800,000) Shapiro (500,000) Cost of goods sold 500,000 300,000 Operating expenses 100,000 60,000 Equity in earnings of Shapiro (75,600) Net income (275,600) (140,000) Retained earnings, 1/1 (1,067,000) (575,000) Net income (above) (275,600) (140,000) Dividends declared 115,000 60,000 Retained earnings, 12/31 (1,227,600) (655,000) Cash 177,000 90,000 Accounts receivable 356,000 410,000 Inventory 414,800 320,000 Investment in Shapiro 733,800 Land 140,000 390,000 Buildings and equipment (net) 496,000 300,000 Total assets 2,317,600 1,510,000 Liabilities (480,000) (445,000) Common stock (610,000) (320,000) Additional paid-in capital (90,000) Retained earnings, 12/31 (1,227,600) (655,000) Total liabilities and equity (2,317,600) (1,510,000) Credit balances are in parentheses. Required: 1. (10 points) Show how Patterson determined its Investment in Shapiro account as of December 31, 2023. The balance of this account as of January 1, 2023 was $694,200. Prepare a t- account and show postings to the account during 2023. 2. (36 points) Complete the provided worksheet (in Excel) to consolidate the separate 2023 financial statements of Patterson and Shapiro and do the following: Prepare consolidation entries (Hint: There are nine consolidation entries.) Determine net income to the NCI and Patterson Determine the ending balance of the NCI account Determine consolidation totals 3. (4 points) What would be the ending balance of Investment in Shapiro as of December 31, 2023 if the inventory transfers were downstream (from Patterson to Shapiro) and the beginning balance of Investment in Shapiro were $694,200? Patterson and Shapiro Consolidation Worksheet Year Ending December 31, 2023 Consolidation Entries Credit Accounts Sales Cost of goods sold Operating expenses Patterson -800,000 500,000 Shapiro -500,000 Debit 300,000 100,000 60,000 Equity in earnings f Shapiro -75,600 Separate company net net income -275,600 -140.000 Consolidated net income Net income to NCI Net income! to Patterson Company RE, 1/1-Patterson -1,067,000 RE, 1/1-Shapiro Net income (above) Dividends declared -275,600 115,000 Retained earnings, 12/31 -1,227,600 -575,000 -140.000 60,000 -655,000 Cash 177,000 90,000 Accounts receivable 356,000 410,000 Inventory 414,800 320,000 Investment in Shapiro 733,800 = 140.000 390.000 Buildings and equipment (net) 496,000 300,000 Customer list Total assets Liabilities Common stock 2,317,600 -480,000 -610,000 Additional paid-in capital Retained earnings, 12/31 -1,227,600 1,510,000 -445,000 -320,000 -90,000 -655,000 NCI in Shapiro, 1/1 NCI in Shapiro, 12/31 Total liabilities and equity -2,317,600 -1,510,000 Noncontrolling Consolidated Interest Totals Note: Use parentheses to indicate credit balances if a single column is used to show debit/credit balances.