Paque Corporation owns 90% of the common stock of Segal Company. The stock was purchased for $810,000 on January 1, 2009, when Segal Company’s retained earnings were $150,000. Financial data for 2013 are presented here:

The January 1, 2013, inventory of Paque Corporation includes $45,000 of profit recorded by Segal Company on 2012 sales. During 2013, Segal Company made intercompany sales of $300,000 with a markup of 20% of selling price. The ending inventory of Paque Cor- poration includes goods purchased in 2013 from Segal Company for $75,000. Paque Corpo- ration uses the partial equity method to record its investment in Segal Company.

Required:

A. Prepare the consolidated statements workpaper for the year ended December 31, 2013.

B. Calculate consolidated retained earnings on December 31, 2013, using the analytical or t-account approach.

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Paque Corporation Segal Company $ 795,000 $1,650,000 64,125 1,714,125 Sales Equity in Subsidiary Income Total Revenue 795,000 Cost of Goods Sold: 225,000 1,275,000 1,500,000 165,000 525,000 690,000 172,500 517,500 206,250 723,750 71,250 Beginning Inventory Purchases Cost of Goods Available Less: Ending Inventory 210,000 1,290,000 310,500 1,600,500 $ 113,625 Cost of Goods Sold Other Expenses Total Cost and Expense Net Income 1/1 Retained Earnings 838,500 180,000 71,250 (60,000) $ 191,250 Net Income 113,625 (150,000) 802,125 Dividends Declared 12/31 Retained Earnings $ 93,000 319,500 210,000 847,125 Cash $ 75,000 Accounts Receivable 168,750 172,500 Inventory Investment in Segal Company Other Assets 750,000 630,000 $1,046,250 Total Assets $2,219,625 $ 45,000 $ 105,000 112,500 1,200,000 802,125 $2,219,625 Accounts Payable Other Current Liabilities Capital Stock Retained Earnings Total Liabilities and Equity 60,000 750,000 191,250 $1,046,250