Workpaper—Sale of Shares by Parent, Cost Method

The accounts of Pyle Company and its subsidiary, Stern Company, are summarized below as of December 31, 2011:

Debits	Pyle	Stem
Current Assets	$ 600,000	$ 320,000
Investment in Stern Company	480,000
Other Assets	1,180,000	668,000
Dividends Declared, 11/1	80,000	60,000
	$2.340.000	$1.048,000
Credits
Liabilities	$ 190,000	$ 90,000
Common Stock, $5 par	500,000	300,000
Other Contributed Capital	230,000	180,000
1/1 Retained Earnings	1,200,000	292,000
Net Income	220.000	186.000
	$2,340,000	$1,048,000

Pyle Company made the following open-market purchase and sale of Stern Company common stock: January 2, 2009, purchased 51,000 shares, cost $510,000; April 1, 2011, sold 3,000 shares, proceeds, $100,000.

The book value of Stern Company"s net assets on January 2, 2009, $600,000, (including retained earnings of $120,000) approximated the fair value of those net assets. Subsequent changes in book value of the net assets are entirely attributable to earnings of Stern Company. Stern Company earns its income evenly throughout the year.

Required:

Prepare a consolidated financial statements workpaper as of December 31, 2011. Begin the income statement section of the workpaper with “Net Income Before Dividend Income” which is $172,000 and $186,000 for Pyle Company and Stern Company, respectively.