Akron, Inc., owns all outstanding stock of Toledo Corporation. Amortization expense of $15,000 per year for patented technology resulted from the original acquisition. For 2021, the companies had the following account balances:

Intra-entity sales of $320,000 occurred during 2020 and again in 2021. This merchandise cost $240,000 each year. Of the total transfers, $70,000 was still held on December 31, 2020, with $50,000 unsold on December 31, 2021.

a. For consolidation purposes, does the direction of the transfers (upstream or downstream) affect the balances to be reported here?

b. Prepare a consolidated income statement for the year ending December 31, 2021.

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Akron Toledo $1,100,000 $600,000 400,000 220,000 Sales .. Cost of goods sold Operating expenses Investment income 500,000 400,000 Not given 80,000 -0- Dividends declared 30,000