Trial balances for Phan Company and its subsidiary Sato Company on December 31, 2010, are as follows:

Phan Company acquired its investment in Sato Company through open-market purchases of stock as follows:

Any difference between implied and book values of the interest acquired relates to Sato Company land, which is included in Other Assets. Sato Company issued 40,000 shares of stock on July 1, 2006, its date of incorporation. No other capital stock transactions were undertaken by Sato Company after that time.

Required:
Prepare a consolidated financial statements workpaper for Phan Company and its subsidiary
Sato Company on December 31,2010.

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Phan Sato $165,500 334,425 920,000 150,000 1,100,000 350,000 3,019,92:5 138,000 Current Assets Investment in Sato Company Other Assets Dividends Declared Cost of Goods Sold Other Expenses 672,000 70,000 320,000 130,000 $%1.330,000 160,000 400,000 Liabilities Capital Stock, $10 par Paid in Capital 1/1 Retained Earnings Sales Gain on revaluation Dividend Incom 142,050 600,000 100,000 326,325 1,800,000 13,925 37,625 $3,019,925 165,000 605,000 $1,330,000 Sato Company Date Shares Purchased Cost Retained Earnings Balance 9,000 12,500 14,500 36,000 110,500 210,000 280,000 $600,500 46,000 165,000 250,000 1/1/09 Total