Paque Corporation owns 90% of the common stock of Segal Company. The stock was purchased for $810,000 on January 1, 2017, when Segal Company?s retained earnings were $150,000.

Financial data for 2021 are presented here:

The January 1, 2021, inventory of Paque Corporation includes $45,000 of profit recorded by Segal Company on 2020 sales. During 2021, Segal Company made intercompany sales of $300,000 with a markup of 20% of selling price. The ending inventory of Paque Corporation includes goods purchased in 2021 from Segal Company for $75,000. Paque Corporation uses the partial equity method to record its investment in Segal Company.

Required:

A. Prepare the consolidated statements workpaper for the year ended December 31, 2021.

B. Calculate consolidated retained earnings on December 31, 2021, using the analytical or t-account approach.

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Paque Corporation Segal Company $ 795,000 $1,650,000 Sales Equity in Subsidiary Income 91,125 1,741,125 Total Revenue 795,000 Cost of Goods Sold: Beginning Inventory 225,000 165,000 525,000 Purchases 1,275,000 Cost of Goods Available 1,500,000 690,000 Less: Ending Inventory 210,000 172,500 Cost of Goods Sold 1,290,000 517,500 Other Expenses 310,500 206,250 Total Cost and Expense 1,600,500 723,750 $ 140,625 $ 71,250 Net Income 1/1 Retained Earnings 798,000 180,000 140,625 Net Income 71,250 Dividends Declared (150,000) $ 788,625 (60,000) $ 191,250 12/31 Retained Earnings Paque Corporation Segal Сотрany Cash $ 93,000 $ 75,000 Accounts Receivable 319,500 168,750 Inventory 210,000 172,500 Investment in Segal Company 833,625 Other Assets 750,000 630,000 $1,046,250 Total Assets $2,206,125 Accounts Payable 105,000 45,000 Other Current Liabilities 112,500 60,000 Capital Stock Retained Earnings Total Liabilities and Equity 1,200,000 750,000 788,625 191,250 $2,206,125 $1,046,250