On April 1, 2011, Baxter Corporation purchased 80% of the outstanding stock of Crayon Company for $425,000. A condensed balance sheet of Crayon Company at the purchase date is shown below

All book values approximated fair values on the purchase date. Any excess cost was attributed to goodwill. The following information was gathered pertaining to the first two years of operation since Baxter€™s purchase of Crayon Company stock:
a. Intercompany merchandise sales were summarized as follows:

b. On March 31, 2013, Baxter owed Crayon $10,000, and Crayon owed Baxter $5,000 as a result of the intercompany sales.
c. Baxter paid $25,000 in cash dividends on March 20, 2012 and 2013. Crayon paid its first cash dividend on March 10, 2013, giving each share of outstanding common stock a $0.15 cash dividend.
d. The trial balances of the two companies as of March 31, 2013, follow:

Required
1. Prepare the worksheet necessary to produce the consolidated financial statements of Baxter Corporation and its subsidiary for the year ended March 31, 2013. Include the value analysis and a determination and distribution of excess schedule and the income distribution schedules.
2. Prepare the formal consolidated income statement for the fiscal year ending March 31, 2013.

Assets Liabilities and Equity Current assets $180,000 Liabilies. $100,000 Long-lived assets (ne 320,000 Common stock... Paid-in capital in excess of par. 100,000 100,000 $500,000 Retained earnings $500,000 Total labilities and equity Merchondise Remaining in Purchaser's Sales $35,000 20,000 32,000 30,000 Date Transaction Baxter to Crayon Crayon to Baxter Baxter to Crayon Crayon to Baxter Gross Profit Endi I 5% 20 $9,000 3,500 April 1, 2011 to March 31, 2012 Apri 1, 2012 to 6,000 3,000 March 31, 2013 25 216,200 Inventory .. . Investment in Crayon Company.... 425,000 Accounts Payable (242,200) [106,300) Common Stock ($0.50 par) Common Stock ($1 par) Paid-In Capital in Excess of Par.. . (1,250,000) (100,000) . . . . . . . 130,000 Dividends Declared