Pace Company owns 85% of the outstanding common stock of Sand Company and all the outstanding common stock of Star Company. During 2025, the affiliates engaged in intercompany sales as follows:

The following amounts of intercompany profits were included in the December 31, 2024, and December 31, 2025, inventories of the individual companies:

Income from each company’s independent operations (including sales to affiliates) for the year ended December 31, 2025, is presented here:

Required:
A. Prepare in general journal form the workpaper entries necessary to eliminate intercompany sales and intercompany profit in the December 31, 2025, consolidated financial statements workpaper.
B. Calculate the balance to be reported in the consolidated income statement for the following line items: Consolidated income.
Noncontrolling interest in consolidated income. Controlling interest in consolidated income

Transcribed Image Text:

Pace to Sand Sand to Pace Sand to Star Star to Pace Sales of Merchandise $ 40,000 60,000 75,000 50,000 $225,000