Early in 20x1, Carter Corporation acquired Diroff Corporation. Diroff continued to operate as a Carter subsidiary. At the end of 20x1, the president of Carter asked the company's public accounting firm to prepare consolidated financial statements. Data from the separate financial statements of the two corporations are given in Exhibit 1. (For the purpose of this case, these data have been condensed and rounded.)

Questions
1. Reconstruct the consolidated financial statements that the accountant originally prepared.
2. Prepare revised consolidated financial statements based on the information that the accountant learned in his first conversation with the president.

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EXHIBIT 1 Financial Statement Information Balance Sheet Data As of December 31, 20x1 Carter Diroff Assets Cash Accounts receivable Inventory Investment in subsidiany Plant (net) Loans recevable Total assets Liabilities and Equity Current liabilities Noncurrent labilities Capital stock Retained earnings Total labilities and equity 5 57,800 110,500 120,700 142,800 477.700 s 20,400 35,700 54,400 134,300 32,300 277,100 5 909 500 s 88,400 170,000 255,000 s 62.900 54,400 102,000 57,800 5277 100 909,500 Income Statement Data, 20x1 Cost of sales Gross margin Expenses (ncuding income taxes) Operating income (loss) Other income Net income Dividends Added to retained earnings $1,040,400 816,000 224,400 234,600 (10,200) 37.400 27,200 $408,000 299, 200 108,800 61.200 47,600 47,600 27.200