On January 1, 2023, Pulaski, Incorporated, acquired a 60 percent interest in the common stock of Sheridan, Incorporated, for $351,600. Sheridan's book value on that date consisted of common stock of $100,000 and retained earnings of $207,900. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $234,400. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $88,600 and also had unpatented technology (15- year estimated remaining life) undervalued by $64,500. 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: Cost to Pulaski Year 2023 2024 Transfer Price to Sheridan Ending Balance (at transfer price) $ 138,900 $ 173,625 113,400 151,200 $ 57,875 37,800 The individual financial statements for these two companies as of December 31, 2024, and the year then ended follow: Itens Sales Cost of goods sold Operating expenses Equity in earnings in Sheridan Net income Retained earnings, 1/1/24 Net income Dividends declared Retained earnings, 12/31/24 Cash and receivables Inventory Investment in Sheridan Buildings (net) Connon stock Pulaski, Incorporated $ (765,000) 502,800 203,285 (38,749) $ (97,664) $ (850,200) (97,664) 52,000 $ (895,864) $ 304,600 286,200 405,198 377,000 269,000 8 $ 1,641,998 $ (446,134) (300,000) (895,864) $ (1,641,998) Sheridan, Incorporated $ (406,000) 247,600 84,200 $ (74,200) $ (286,600) (74,200) 21,500 $ (339,300) $ 154,500 134,500 0 208,800 92,300 27,300 $ 617,400 $ (178,100) (100,000) (339,300) $ (617,400) Equipment (net) Patents (net) Total assets Liabilities Retained earnings, 12/31/24 Total liabilities and equities Note: Parentheses indicate a credit balance. Required: a. Show how Pulaski determined the $405,198 Investment in Sheridan account balance. Assume that Pulaski defers 100 percent of downstream intra-entity profits against its share of Sheridan's income.