Prather Company owns 80% of the common stock of Stone Company. The stock was purchased for $960,000 on January 1, 2022, when Stone Company’s retained earnings were $675,000. On January 1, 2024, Stone Company sold fixed assets to Prather Company for $960,000; Stone Company had purchased these assets for $1,350,000 on January 1, 2009, at which time their estimated useful life was 25 years. The estimated remaining useful life to Prather Company on 1/1/24 is 10 years. Both companies employ the straight- line method of depreciation.

Required:
A. Prepare a consolidated statements workpaper for the year ended December 31, 2025.
B. Calculate consolidated retained earnings on December 31, 2025, using a t- account or analytical approach.

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The financial data for 2025 are presented here: Sales Equity in Subsidiary Income Total Revenue Cost of Goods Sold Other Expenses Total Cost and Expense Net Income 1/1 Retained Earnings Net Income Dividends Declared 12/31 Retained Earnings Inventory Investment in Stone Company Fixed Assets Accumulated Depreciation-Fixed Assets Total Assets Liabilities Common Stock Retained Earnings Total Liabilities and Equity Prather Company $1,950,000 252,000 2,202,000 1,350,000 225,000 1,575,000 $ 627,000 $1,397,400 627,000 (150,000) $1,874,400 $ 498,000 1,334,400 2,168,100. (900,000) $3,100,500 $ 465,600 760,500 1,874,400 $3,100,500 Stone Company $1,350,000 1,350,000 900,000 150,000 1,050,000 $ 300,000 $1,038,000 300,000 (75,000) $1,263,000 $225,000 2,625,000 (612,000) $2,238,000 $ 450,000 525,000 1,263,000 $2,238,000