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Net income (above) (320, 000) (200,000) (100,000) Dividends declared 128, 000 S (892,000) S (800,000) S(400,000) etained earnings, 12/31/18 $380,000 $444,000 $ 280, 000 Current assets Investment in Yarrow Company Investment in Stookey Company Land, buildings, and equipment (net) 720,000 344,000 836, 000 949,000 520,000 2,113,000 1,560,000 $ 800, 000 Total assets Liabilities $ (721,000) (500, 000) (460,000) (200, 000) (300, 000) Common stock (200,000) Retained earnings, 12/31/18 (892, 000) (800, 000) (400,000) $ (2,113,000) (1,560,000) (800, 000) Total liabilities and equities Note: Parentheses indicate a credit balance a. Prepare the business combination's 2018 consolidation worksheet; ignore income tax effects. b. Determine the amount of income tax for Travers and Yarrow on a consolidated tax return for 2018. c. Determine the amount of Stookey's income tax on a separate tax return for 2018 d. Based on the answers to requirements (b) and (c), what journal entry does this combination make to record 2018 income tax? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below Com Retained earnings, 1/1/18 217,670 685,85 85,856 (700,000) 917,670) Travers Company Yarrow Company (600,000) (300,000) 30,000 Stookey Company 0 Net income (above) (320,000) (200,000) (100,000) (563,418) Dividends declared 128,000 128,000 (892,000) (800,000) (400,000) (1,353,088) Retained earnings, 12/31/18 1,094,400 Current assets 280,000 9,600 444,000 380,000 217,670937,670 85,856429,856 Investment in Yarrow Company 720,000 Investment in Stookey Company 344,000 0 2,305,000 Land, buildings, & equipment (net) 949,000 836,000 520,000 450005,000 604,00 40,000 52,000 Copyright Customer list Total assets 2,113,000 1,560,00D 800,000 3,491,400 (1,381,000) (500,000) (1,353,088) Liabilities (721,000) (460,000) (200,000) (500,000) (300,000) (200,000)500,000 Common stock 98,464 Retained earnings, 12/31/18 (above) (892,000) (800,000) (400,000) 107,586 (107,464) 5,(104,186) NCI interest in Stookey, 1/1/18 Noncontrolling interest in Yarrow, 1/1/18 0 (257,312) (257,312) Noncontrolling interests in subsidiaries (2,113,000) 1,560,000) (800,000) 2,008,982 2,008,982 Total liabilities and equities (3,491,400) On January 1, 2017, Travers Company acquired 90 percent of Yarrow Company's outstanding stock for $720,000. The 10 percent noncontrolling interest had an assessed fair value of $80,000 on that date. Any acquisition-date excess fair value over book value was attributed to an unrecorded customer list developed by Yarrow with a remaining life of 15 years. On the same date, Yarrow acquired an 80 percent interest in Stookey Company for $344,000. At the acquisition date, the 20 percent noncontrolling interest fair value was $86,000. Any excess fair value was attributed to a fully amortized copyright that had a remaining lfe of 10 years. Although both investments are accounted for using the inltial value method, nelther Yarrow nor Stookey have distributed dividends since the acquisition date. Travers has a policy to declare and pay cash dividends each year equal to 40 percent of its separate company operating earnings. Reported income totals for 2017 follow: 300, 000 Travers Company Yarrow Company Stookey Company 160,000 120,000 Following are the 2018 financial statements for these three companies. Stookey has transferred numerous amounts of inventory to Yarrow since the takeover amounting to $80,000 (2017) and $100,000 (2018). These transactions include the samemarkup applicable to Stookey's outside sales. In each year, Yarrow carried 20 percent of this inventory into the succeeding year before disposing of it. An effective tax rate of 45 percent is applicable to all companies. All dividend declarations are paid in the same period. Stookey Travers Yarrow Company S (900,000) (600, 000 (500, 000) Company Company Sales Cost of goods sold Operating expenses 480,000 100,000 320, 000 80, 000 260, 000 140,000 S (320,000) S (200,000) $ (100, 000) Net income Retained earnings, 1/1/18 S700,000) S (600, 000) (300, 000) Net income (above) (320, 000) (200,000) (100,000) Dividends declared 128, 000 S (892,000) S (800,000) S(400,000) etained earnings, 12/31/18 $380,000 $444,000 $ 280, 000 Current assets Investment in Yarrow Company Investment in Stookey Company Land, buildings, and equipment (net) 720,000 344,000 836, 000 949,000 520,000 2,113,000 1,560,000 $ 800, 000 Total assets Liabilities $ (721,000) (500, 000) (460,000) (200, 000) (300, 000) Common stock (200,000) Retained earnings, 12/31/18 (892, 000) (800, 000) (400,000) $ (2,113,000) (1,560,000) (800, 000) Total liabilities and equities Note: Parentheses indicate a credit balance a. Prepare the business combination's 2018 consolidation worksheet; ignore income tax effects. b. Determine the amount of income tax for Travers and Yarrow on a consolidated tax return for 2018. c. Determine the amount of Stookey's income tax on a separate tax return for 2018 d. Based on the answers to requirements (b) and (c), what journal entry does this combination make to record 2018 income tax? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below Com Retained earnings, 1/1/18 217,670 685,85 85,856 (700,000) 917,670) Travers Company Yarrow Company (600,000) (300,000) 30,000 Stookey Company 0 Net income (above) (320,000) (200,000) (100,000) (563,418) Dividends declared 128,000 128,000 (892,000) (800,000) (400,000) (1,353,088) Retained earnings, 12/31/18 1,094,400 Current assets 280,000 9,600 444,000 380,000 217,670937,670 85,856429,856 Investment in Yarrow Company 720,000 Investment in Stookey Company 344,000 0 2,305,000 Land, buildings, & equipment (net) 949,000 836,000 520,000 450005,000 604,00 40,000 52,000 Copyright Customer list Total assets 2,113,000 1,560,00D 800,000 3,491,400 (1,381,000) (500,000) (1,353,088) Liabilities (721,000) (460,000) (200,000) (500,000) (300,000) (200,000)500,000 Common stock 98,464 Retained earnings, 12/31/18 (above) (892,000) (800,000) (400,000) 107,586 (107,464) 5,(104,186) NCI interest in Stookey, 1/1/18 Noncontrolling interest in Yarrow, 1/1/18 0 (257,312) (257,312) Noncontrolling interests in subsidiaries (2,113,000) 1,560,000) (800,000) 2,008,982 2,008,982 Total liabilities and equities (3,491,400) On January 1, 2017, Travers Company acquired 90 percent of Yarrow Company's outstanding stock for $720,000. The 10 percent noncontrolling interest had an assessed fair value of $80,000 on that date. Any acquisition-date excess fair value over book value was attributed to an unrecorded customer list developed by Yarrow with a remaining life of 15 years. On the same date, Yarrow acquired an 80 percent interest in Stookey Company for $344,000. At the acquisition date, the 20 percent noncontrolling interest fair value was $86,000. Any excess fair value was attributed to a fully amortized copyright that had a remaining lfe of 10 years. Although both investments are accounted for using the inltial value method, nelther Yarrow nor Stookey have distributed dividends since the acquisition date. Travers has a policy to declare and pay cash dividends each year equal to 40 percent of its separate company operating earnings. Reported income totals for 2017 follow: 300, 000 Travers Company Yarrow Company Stookey Company 160,000 120,000 Following are the 2018 financial statements for these three companies. Stookey has transferred numerous amounts of inventory to Yarrow since the takeover amounting to $80,000 (2017) and $100,000 (2018). These transactions include the samemarkup applicable to Stookey's outside sales. In each year, Yarrow carried 20 percent of this inventory into the succeeding year before disposing of it. An effective tax rate of 45 percent is applicable to all companies. All dividend declarations are paid in the same period. Stookey Travers Yarrow Company S (900,000) (600, 000 (500, 000) Company Company Sales Cost of goods sold Operating expenses 480,000 100,000 320, 000 80, 000 260, 000 140,000 S (320,000) S (200,000) $ (100, 000) Net income Retained earnings, 1/1/18 S700,000) S (600, 000) (300, 000)