n December 28, 20X3, Stern Corporation and Ram Company established S&R Partnership, with cash contributions of $20,000 and $80,000, respectively. The partnerships purpose is to purchase from Stern accounts receivable that have an average collection period of 80 days and hold them to collection. The partnership borrows cash from Midtown Bank and purchases the receivables without recourse but at an amount equal to the expected percent to be collected, less a financing fee of 5 percent of the gross receivables. Stern and Ram hold 20 percent and 80 percent of the ownership of the partnership, respectively, and Stern guarantees both the bank loan made to the partnership and a 25 percent annual return on the investment made by Ram. Stern receives any income in excess of the 25 percent return guaranteed to Ram. The partnership agreement provides Stern total control over the partnerships activities. On December 31, 20X3, Stern sold $8,110,000 of accounts receivable to the partnership. The partnership immediately borrowed $7,620,000 from the bank and paid Stern $7,480,000. Prior to the sale, Stern had established a $407,000 allowance for uncollectibles on the receivables sold to the partnership. The balance sheets of Stern and S&R immediately after the sale of receivables to the partnership contained the following:

	Stern Corporation					S&R Partnership
Cash		$	8,030,000				$	422,500
Accounts Receivable			4,220,000					8,110,000
Allowance for Uncollectible Accounts			(216,000	)				(407,000	)
Other Assets			5,550,000
Prepaid Finance Charges			405,500
Investment in S&R Partnership			20,000
Accounts Payable			937,000
Deferred Revenue								405,500
Bank Notes Payable								7,620,000
Bonds Payable			9,640,000
Common Stock			685,000
Retained Earnings			6,747,500
Capital, Stern Corporation								20,000
Capital, Ram Company								80,000

Required: Assuming that Stern is S&R's primary beneficiary, prepare a consolidated balance sheet for Stern at January 1, 20X4. (Amounts to be deducted should be indicated by a minus sign.)

20X3, Stern sold $8,110,000 of accounts receivable to the partnership. The partnership immediately borrowed $7,620,000 from the bank and paid Stern $7,480,000. Prior to the sale, Stern had established a $407,000 allowance for uncollectibles on the receivables sold to the partnership. The balance sheets of Stern and S&R immediately after the sale of receivables to the partnership contained the following: Stern Corporation S&R Partnership Cash $ 8,030,000 $ 422,500 Accounts Receivable 4,220,000 8,110,000 Allowance for Uncollectible Accounts (216,000 ) (407,000 ) Other Assets 5,550,000 Prepaid Finance Charges 405,500 Investment in S&R Partnership 20,000 Accounts Payable 937,000 Deferred Revenue 405,500 Bank Notes Payable 7,620,000 Bonds Payable 9,640,000 Common Stock 685,000 Retained Earnings 6,747,500 Capital, Stern Corporation 20,000 Capital, Ram Company 80,000 Required: Assuming that Stern is S&R's primary beneficiary, prepare a consolidated balance sheet for Stern at January 1, 20X4. (Amounts to be deducted should be indicated by a minus sign.)

STERN CORPORATION Consolidated Balance Sheet January 1, 20X4 Assets 0 S 0 Total Assets Liabilities Stockholders' Equity: Controlling Interest: Total Controlling Interest w 0 0 Total Stockholders' Equity Total Liabilities and Stockholders' Equity $ 0