Reference no: EM133066251

Question - Pruitt Corporation owns 90% of the common stock of Sedbrook Company. The stock was purchased for $625,500 on January 1, 2017, when Sedbrook Company's retained earnings were $95,000. Preclosing trial balances for the two companies at December 31, 2021, are presented here:

Pruitt Corporation Sedbrook Company

Cash $90,800 $96,000

Accounts Receivable (net) 243,300 135,000

Inventory 1/1 165,000 132,000

Investment in Sedbrook Co. 625,500

Other Assets 550,000 480,000

Dividends Declared 110,000 35,000

Purchases 935,000 420,000

Other Expenses 198,000 165,000

Total $2,917,600 $1,463,000

Accounts Payable $77,000 $36,000

Other Liabilities 120,700 47,000

Common Stock 880,000 600,000

Retained Earnings (1/1) 598,400 144,000

Sales 1,210,000 636,000

Dividend Income 31,500 -

Total $2,917,600 $1,463,000

Ending Inventory $220,000 $144,000

The January 1, 2021, inventory of Sedbrook Company includes $25,000 of profit recorded by Pruitt Corporation on 2020 sales. During 2021, Pruitt Corporation made intercompany sales of $250,000 with a markup of 20% on cost. The ending inventory of Sedbrook Company includes goods purchased in 2021 from Pruitt for $60,000.

Required - Prepare the consolidated statements work-paper for the year ended December 31, 2021.