Pitts Company owns 80% of the common stock of Shannon Company. The stock was purchased for $960,000 on January 1, 2022, when Shannon Company’s retained earnings were $675,000. On January 1, 2024, Shannon Company sold fixed assets to Pitts Company for $960,000; Shannon Company had purchased these assets for $1,350,000 on January 1, 2014, at which time their estimated useful life was 25 years. The estimated remaining useful life to Pitts Company on 1/1/24 is 10 years. Both companies employ the straight- line method of depreciation. The financial data for 2025 are presented here:

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

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Sales Dividend Income Total Revenue Cost of Goods Sold Other Expenses Total Cost and Expense Net Income Pitts Company $1,950,000 60,000 2,010,000 1,350,000 225,000 1,575,000 $ 435,000 Shannon Company $1,350,000 1,350,000 900,000 150,000 1,050,000 $ 300,000