On January 1, 2023, Pulaski, Incorporated, acquired a 60 percent interest in the common stock of...

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On January 1, 2023, Pulaski, Incorporated, acquired a 60 percent interest in the common stock of Sheridan, Incorporated, for $420,000. Sheridan's book value on that date consisted of common stock of $100,000 and retained earnings of $248,300. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $280,000. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $87,100 and also had unpatented technology (15- year estimated remaining life) undervalued by $63,000. Any remaining excess acquisition-date fair value was assigned to an indefinite- lived trade name. Since acquisition, Pulaski has applied the equity method to its Investment in Sheridan account. 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 Year Cost to Pulaski 2023 2024 to Sheridan $ 138,000 $ 172,500 112,800 150,400 Ending Balance (at transfer price) The individual financial statements for these two companies as of December 31, 2024, and the year then ended follow: Items Sales Cost of goods sold Operating expenses Equity in earnings in Sheridan Net income Retained earnings, 1/1/24 Net income Dividends declared. Retained earnings, 12/31/24 Cash and receivables Inventory Investment in Sheridan Buildings (net) Equipment (net) Pulaski, Incorporated $ (760,000) 499,500 202,710 (38,034) $ (95,824) $ (829,700) (95,824) 51,300 $ (874,224) $ 297,100 279,100 448,688 370,000 264,000 $ 1,658,888 Sheridan, Incorporated $ (399,000) 243,400 82,800 $ (72,800) $ (286,100) (72,800) 21,300 $ (337,600) $ 153,700 133,900 $ 57,500 37,600 The individual financial statements for these two companies as of December 31, 2024, and the year then ended follow: Patents (net) Total assets Liabilities Common stock Retained earnings, 12/31/24 Total liabilities and equities Note: Parentheses indicate a credit balance. Required: $ (484,664) (300,000) (874,224) $ (1,658,888) 208,500 92,100 26,800 $ 615,000 $ (177,400) (100,000) (337,600) $ (615,000) a. Show how Pulaski determined the $448,688 Investment in Sheridan account balance. Assume that Pulaski defers 100 percent of downstream intra-entity profits against its share of Sheridan's income. b. Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2024. Required: a. Show how Pulaski determined the $448,688 Investment in Sheridan account balance. Assume that Pulaski defers 100 percent of downstream intra-entity profits against its share of Sheridan's income. b. Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2024. Sales Cost of goods sold Operating expenses Complete this question by entering your answers in the tabs below. Required A Required B Consolidation Entries Accounts Pulaski Sheridan Debit Credit Noncontrolling Consolidated Interest Totals $ (760,000) $ 499,500 (399,000) 243,400 202,710 82,800 Equity in earnings of Sheridan Separate company net income Consolidated net income (38,034) 0 (95,824) (72,800) To noncontrolling interest To Pulaski, Incorporated Retained earnings 1/1/24 Net income (829,700) (95,824) (286,100) (72,800) Dividends declared 51,300 21,300 Retained earnings 12/31/24 $ (874,224) $ (337,600) $ 297,100 $ 153,700 279,100 133,900 448,688 0 370,000 208,500 264,000 92,100 0 26,800 Show how Pulaski determined the $448,688 Investment in Sheridan account balance. Assume that Pulaski defers 100 percent of downstream intra-entity profits against its share of Sheridan's income. Note: Amounts to be deducted should be indicated with a minus sign. Cash and receivables Inventory Investment in Sheridan Buildings (net) 0 $ 0 Equipment (net) Patents (net) Unpatented technology Trade name Total assets Liabilities Common stock $ 1,658,888 $ (484,664) 615,000 (177,400) (300,000) (100,000) Noncontrolling interest 1/1/24 Noncontrolling interest 12/31/24 Retained earnings 12/31/24 (874,224) Total liabilities and equities $ (1,658,888) $ (337,600) (615,000) $ 0 $ 0 On January 1, 2023, Pulaski, Incorporated, acquired a 60 percent interest in the common stock of Sheridan, Incorporated, for $420,000. Sheridan's book value on that date consisted of common stock of $100,000 and retained earnings of $248,300. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $280,000. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $87,100 and also had unpatented technology (15- year estimated remaining life) undervalued by $63,000. Any remaining excess acquisition-date fair value was assigned to an indefinite- lived trade name. Since acquisition, Pulaski has applied the equity method to its Investment in Sheridan account. 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 Year Cost to Pulaski 2023 2024 to Sheridan $ 138,000 $ 172,500 112,800 150,400 Ending Balance (at transfer price) The individual financial statements for these two companies as of December 31, 2024, and the year then ended follow: Items Sales Cost of goods sold Operating expenses Equity in earnings in Sheridan Net income Retained earnings, 1/1/24 Net income Dividends declared. Retained earnings, 12/31/24 Cash and receivables Inventory Investment in Sheridan Buildings (net) Equipment (net) Pulaski, Incorporated $ (760,000) 499,500 202,710 (38,034) $ (95,824) $ (829,700) (95,824) 51,300 $ (874,224) $ 297,100 279,100 448,688 370,000 264,000 $ 1,658,888 Sheridan, Incorporated $ (399,000) 243,400 82,800 $ (72,800) $ (286,100) (72,800) 21,300 $ (337,600) $ 153,700 133,900 $ 57,500 37,600 The individual financial statements for these two companies as of December 31, 2024, and the year then ended follow: Patents (net) Total assets Liabilities Common stock Retained earnings, 12/31/24 Total liabilities and equities Note: Parentheses indicate a credit balance. Required: $ (484,664) (300,000) (874,224) $ (1,658,888) 208,500 92,100 26,800 $ 615,000 $ (177,400) (100,000) (337,600) $ (615,000) a. Show how Pulaski determined the $448,688 Investment in Sheridan account balance. Assume that Pulaski defers 100 percent of downstream intra-entity profits against its share of Sheridan's income. b. Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2024. Required: a. Show how Pulaski determined the $448,688 Investment in Sheridan account balance. Assume that Pulaski defers 100 percent of downstream intra-entity profits against its share of Sheridan's income. b. Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2024. Sales Cost of goods sold Operating expenses Complete this question by entering your answers in the tabs below. Required A Required B Consolidation Entries Accounts Pulaski Sheridan Debit Credit Noncontrolling Consolidated Interest Totals $ (760,000) $ 499,500 (399,000) 243,400 202,710 82,800 Equity in earnings of Sheridan Separate company net income Consolidated net income (38,034) 0 (95,824) (72,800) To noncontrolling interest To Pulaski, Incorporated Retained earnings 1/1/24 Net income (829,700) (95,824) (286,100) (72,800) Dividends declared 51,300 21,300 Retained earnings 12/31/24 $ (874,224) $ (337,600) $ 297,100 $ 153,700 279,100 133,900 448,688 0 370,000 208,500 264,000 92,100 0 26,800 Show how Pulaski determined the $448,688 Investment in Sheridan account balance. Assume that Pulaski defers 100 percent of downstream intra-entity profits against its share of Sheridan's income. Note: Amounts to be deducted should be indicated with a minus sign. Cash and receivables Inventory Investment in Sheridan Buildings (net) 0 $ 0 Equipment (net) Patents (net) Unpatented technology Trade name Total assets Liabilities Common stock $ 1,658,888 $ (484,664) 615,000 (177,400) (300,000) (100,000) Noncontrolling interest 1/1/24 Noncontrolling interest 12/31/24 Retained earnings 12/31/24 (874,224) Total liabilities and equities $ (1,658,888) $ (337,600) (615,000) $ 0 $ 0