Workpaper, Cost Method, Comprehensive Problem LO $6$ LO $8$ Parsons Company acquired $90\%$ of the outstanding common stock of Shea Company on June $30,2019,$ for $$426,000.$ On that date, Shea Company had retained earnings in the amount of $$60,000,$ and the fair value of its recorded assets and liabilities was equal to their book value. The excess of implied over the fair value of the recorded net assets was attributed to an unrecorded manufacturing formula held by Shea Company, which had an expected remaining useful life of five years from June $30,2019.$ Financial data for $2021$ are presented here: Parsons Company Shea Company Sales $$2,555,500$ $$1,120,000$ Dividend Income $54,000$ Total Revenue $2,609,5001,120,000$ Cost of Goods Sold $1,730,000690,500$ Expenses $654,500251,000$ Total Cost and Expense $2,384,500941,500$ Net Income $ $225,000$ $ $178,5001/1$ Retained Earnings $ $595,000$ $ $139,500$ Net Income $225,000178,500$ Dividends Declared $(100,000)(60,000)12/31$ Retained Earnings $ $720,000$ $ $258,000$ Cash $ $119,500$ $ $132,500$ Accounts Receivable $342,000125,000$ Inventory $362,000201,000$ Other Current Assets $40,50013,000$ Land $150,000$ Investment in Shea Company $426,000$ Property and Equipment $825,000241,000$ Accumulated Depreciation $(207,000)(53,500)$ Total Assets $$2,058,000$ $ $659,000$Parsons Company Shea Company Accounts Payable $ $295,000$ $ $32,000$ Other Liabilities $43,00019,000$ Capital Stock $1,000,000300,000$ Additional Paid$-$in Capital $50,000$ Retained Earnings $720,000258,000$ Total Liabilities and Equity $$2,058,000$ $ $659,000$ On December $31,2019,$ Parsons Company sold equipment $($with an original cost of $$100,000$ and accumulated depreciation of $$50,000)$ to Shea Company for $$97,500.$ This equipment has since been depreciated at an annual rate of $20\%$ of the purchase price. During $2020$ Shea Company sold land to Parsons Company at a profit of $$15,000.$ The inventory of Parsons Company on December $31,2020,$ included goods purchased from Shea Company on which Shea Company recognized a profit of $$7,500.$ During $2021,$ Shea Company sold goods to Parsons Company for $$375,000,$ of which $$60,000$ was unpaid on December $31,2021.$ The December $31,2021,$ inventory of Parsons Company included goods acquired from Shea Company on which Shea Company recognized a profit of $$10,500.$ Required: A$.$ Prepare a consolidated financial statements workpaper for the year ended December $31,2021.$ B$.$ Prepare a schedule to calculate consolidated retained earnings on December $31,2021,$ using an analytical or t$-$account approach. $($Hint: Due to rounding, you may be out of balance by $$1.$ To avoid this, you should carry decimals until the final calculation.$)$