Week 5: Homework i Saved Help Save & Exit Submit Check my work mode : This shows what Is correct or Incorrect for the work you have completed so far. It does not Indicate completion. Return to question 5 On January 1, 2020, Mcilroy, Inc., acquired a 60 percent Interest In the common stock of Stinson, Inc., for $384,000. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $227100. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $256,000. The subsidiary held patents (with a 10-year remaining life) that were 10 undervalued within the company's accounting records by $73,300 and an unrecorded customer list (15-year remaining life) points assessed at a $49,500 fair value. Any remaining excess acquisition-date fair value was assigned to goodwill. Since acquisition, Mellroy has applied the equity method to its Investment in Stinson account and no goodwill Impairment has occurred. At year-end, there are no Intra-entity payables or receivables. Intra-entity inventory sales between the two companies have been made as follows: Transfer Price Ending Balance Year Cost to Mcilroy to Stinson (at transfer price) 2020 $123, 606 $154, 506 $51, 506 2021 113, 160 150, 800 37, 700 The individual financial statements for these two companies as of December 31, 2021, and the year then ended follow: Mcilroy, Inc. Stinson, Inc. Sales (711, 800) (349,080) cost of goods sold 467, 300 213, 400 Operating expenses 192, 405 72, 800 Equity in earnings in Stinson (32,177) Net income (83,472) 62, 800) Retained earnings, 1/1/21 (739, 080) (281, 100) Net income 83,472) 62, 800) Dividends declared 46, 200 16, 100 Retained earnings, 12/31/21 $ (776,272) $ (327, 800) cash and receivables 264, 400 149,300 Inventory 248, 406 130, 100 Investment in Stinson 422, 239 Buildings (net) 322, 080 203, 300 Equipment (net) 230, 080 86, 900 Patents (net) 21, 400 Total assets $ 1,487, 039 591, 080 Liabilities (410, 767) (163, 200) Common stock 300, 020) (100, 080 Retained earnings, 12/31/21 (776, 272) (327, 800) Total liabilities and equities $ (1,487, 039) (591,080) (Note: Parentheses Indicate a credit balance.) a. Show how Mcilroy determined the $422,239 Investment In Stinson account balance. Assume that Mcilroy defers 100 percent of downstream Intra-entity profits against its share of Stinson's Income. b. Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2021.Required A Required B Show how Mcilroy determined the $422,239 Investment in Stinson account balance. Assume that Mcllroy defers 100 percent of downstream intra-entity profits against its share of Stinson's income. (Amounts to be deducted should be indicated with a minus sign.) Consideration transferred S 384,000 Increase in Stinson's retained earnings 1/1/20 to 1/1/21 $ 32,400 Excess fair value amortization (6,378) 2020 ending inventory profit deferral (10,300) 15,722 Mollroy's equity in earnings of Stinson for 2021 32,177 Stinson 2021 dividends declared to Mellroy (9,660) S Investment account balance 12/31/21 422,239Required A Required B Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2021. (For accounts wher multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive va Show MCILROY, INC., AND STINSON, INC. Consolidation Worksheet For Year Ending December 31, 2021 Consolidation Entries Accounts Mcllroy Stinson Debit Credit NCI Consolidated Totals Sales S (711,000) S (349,000) S 150,800 S (909,200) Cost of goods sold 467,300 213,400 9, 425 10,300 * 529,025 Operating expenses 192,405 72,800 150,800 % Equity in earnings of Stinson (32, 177 32, 177 Separate company net income 83,472 62,800 Consolidated net income 5 275,835 x To noncontrolling interest To Mellroy, Inc. Retained earnings 1/1/21 739,000) (281, 100) 281,100 Net income 83,472 62,800 Dividends declared 16.200 16, 100 Retained earnings 12/31/21 (776,272) (327,800) Cash and receivables 264,400 49,300 Inventory 248,400 130,100 Investment in Stinson 422,239 9,660 Buildings (net 322,000 203,300 Equipment (net) 230,000 36.900 Patents (net) 21,400 istomer list Goodwill Total assets 5 1,487,039 S 591,000 Liabilities 410,767) 163,200) Common stock 300,000) 100,000) 100,000 Noncontrolling interest 1/1/21 Noncontrolling interest 12/31/21 S (287,776) (287,776) x Retained earnings 12/31/21 776,272) (327,800) (776,272) Total liabilities and equities 5 (1,487,039) 591,000) 583,162 S 161, 100 5 (1,938,015)