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On January $1,2023,$ Pulaski, Incorporated, acquired a $60$ percent interest in the common stock of Sheridan, Incorporated, for $$358,200.$ Sheridan's book value on that date consisted of common stock of $$100,000$ and retained earnings of $$211,800.$ Also, the acquisition$-$date fair value of the $40$ percent noncontrolling interest was $$238,800.$ The subsidiary held patents $($with a $10-$year remaining life$)$ that were undervalued within the company's accounting records by $$89,200$ and also had unpatented technology $(15-$year estimated remaining life$)$ undervalued by $$65,100.$ Any remaining excess acquisition$-$date fair value was assigned to an indefinite$-$lived trade name. Since acquisition, Pulaski has applied the equity method to its Investment in Sheridan account. At year$-$end, there are no intra$-$entity payables or receivables.

Intra$-$entity inventory sales between the two companies have been made as follows:

Year Cost to Pulaski Transfer Price to Sheridan Ending Balance $($at transfer price$)$

$2023$ $ $139,200$ $ $174,000$ $ $58,000$

$2024112,800150,40037,600$

The individual financial statements for these two companies as of December $31,2024,$ and the year then ended follow:

Items Pulaski, Incorporated Sheridan, Incorporated

Sales $ $(766,000)$ $ $(407,000)$

Cost of goods sold $503,500248,200$

Operating expenses $203,56084,400$

Equity in earnings in Sheridan $(38,884)0$

Net income $ $(97,824)$ $ $(74,400)$

Retained earnings, $1/1/24$ $ $(851,000)$ $ $(286,900)$

Net income $(97,824)(74,400)$

Dividends declared $52,10021,800$

Retained earnings, $12/31/24$ $ $(896,724)$ $ $(339,500)$

Cash and receivables $ $304,900$ $ $154,600$

Inventory $286,500134,600$

Investment in Sheridan $409,5080$

Buildings $($net$)379,000209,100$

Equipment $($net$)270,40092,500$

Patents $($net$)027,600$

Total assets $ $1,650,308$ $ $618,400$

Liabilities $ $(453,584)$ $ $(178,900)$

Common stock $(300,000)(100,000)$

Retained earnings, $12/31/24(896,724)(339,500)$

Total liabilities and equities $ $(1,650,308)$ $ $(618,400)$

Note: Parentheses indicate a credit balance.

Required:

Show how Pulaski determined the $$409,508$ Investment in Sheridan account balance. Assume that Pulaski defers $100$ percent of downstream intra$-$entity profits against its share of Sheridan$$s income.

Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December $31,2024.$

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