(Note: This is the same problem as Problem 6-11, but assuming the use of the complete equity method.) Complete equity with downstream sales**

Pruitt Corporation owns 90% of the common stock of Sedbrook Company. The stock was pur- chased for $540,000 on January 1, 2017, when Sedbrook Companys retained earnings were $100,000. Preclosing trial balances for the two companies at December 31, 2021, are pre- sented here:

Pruitt Corporation/ Sedbrook Company

Cash$83,000 80,000

Accounts Receivable (net) 213,000 112,500

Inventory 1/1 150,000 110,000

Investment in Sedbrook Co. 568,250

Other Assets 500,000 400,000

Dividends Declared 100,000 30,000

Purchases 850,000 350,000

Other Expenses 180,000 137,500

$2,644,250 $1,220,000

Pruin Corporation/Sedbrook Company

Accounts Payable 70,000 30,000

Other Liabilities 75,000 40,000

Common Stock 800,000 500,000

Retained Earnings, 1/1 532,000 120,000

Sales1,100,000 530,000

Equity in Subsidiary Income 67,250

$2,644,250 $1,220,000

Ending Inventory $200,000 $120,000

"The January 1, 2021, inventory of Sedbrook Company includes $30,000 of profit recorded by Pruitt Corporation on 2020 sales. During 2021, Pruitt Corporation made intercompany sales of $200,000 with a markup of 25% on cost. The ending inventory of Sedbrook Company includes goods purchased in 2021 from Pruitt for $50,000. Pruitt Corporation uses the complete equity method to record its investment in Sedbrook 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.