Pistol Corporation acquired 70 percent of Scope Corporation’s voting stock on May 18, 20X1. The companies reported the following data with respect to intercompany sales in 20X4 and 20X5:

Pistol reported operating income (excluding income from its investment in Scope) of $160,000 and $220,000 in 20X4 and 20X5, respectively. Scope reported net income of $90,000 and $85,000 in 20X4 and 20X5, respectively.

Required

a. Compute consolidated net income for 20X4.

b. Compute the inventory balance reported in the consolidated balance sheet at December 31, 20X5, for the transactions shown.

c. Compute the amount included in consolidated cost of goods sold for 20X5 relating to the transactions shown.

d. Compute the amount of income assigned to the controlling interest in the 20X5 consolidated income statement.

Transcribed Image Text:

Purchased by Year 20X4 Scope Corp. 20X5 Scope Corp. 20X5 Pistol Corp. Purchase Price $120,000 90,000 140,000 Sold to Pistol Corp. Pistol Corp. Scope Corp. Sale Price $180,000 135,000 280,000 Unsold at End of Year $ 45,000 30,000 110,000 Year Sold to Unaffiliated Co. 20X5 20X6 20X6