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Question 3: (5 mark) Use the following information to answer questions I and 2. Duck Corporation acquired a 70% interest in Whistle Corporation on January 1. 2005, when Whistle's book values were equal to their fair values. During 2005, Duck sold merchandise that cost $76,000 to Whistle for $110,000. On December 31, 2005, three- fourths of the merchandise acquired from Duck remained in Whistle's inventory. Separate incomes (investment income not included) of Duck and Whistle are as follows: Duck Whistle Sales Revenue $ 150,000 3 200,000 Cost of Goods Sold 90.000 "30,000 Operating Expenses 12,000 15,000 Separate incomes $ 48,000 3 115,000 1. The consolidated income statement for Duck Corporation and subsidiary for the year ended December 31, 2005 will show consolidated cost of sales of? (2 marks) Solution: 2. Duck's income from Whistle for 2005 is'.' {2 marks) Solution: 3. Pond Co. a 55%onmed subsidiary of Goose Inc. made the following entry to record a sale of merchandise to Goose: Accounts Receivable 60,000 Sales Revenue 60,000 All Pond sales are at 125% of cost. One-third of this merchandise remained in the Goose's inventory at year-end. A working paper entry to eliminate unrealized profits from consolidated inventory would include a credit to Inventory in the amount of a. 3 4,000. b. 5 5,000. c. 3 8.000. d. $10,000. Solution