Pace Company owns 85% of the outstanding common stock of Sand Company and all the outstanding common
Question:
Pace Company owns 85% of the outstanding common stock of Sand Company and all the outstanding common stock of Star Company. During 2015, the affiliates engaged in intercompany sales as follow
Sales of Merchandise Pace to Sand$40,000Sand to Pace 60,000Sand to Star 75,000Star to Pace 50,000= $225,00
The following amounts of intercompany profits were included in December 31, 2014, and December 31, 2015, inventories of the individual companies:
Intercompany Profit in December 31, 2014, Inventory of Selling Company Pace Sand Star Total Pace Company$7,000 $7,000Sand Company$5,000 $3,000 8,000 Star Company8,000 8,000 Total $13,000 $7,000 $3,000 $23,000
Intercompany Profit in December 31, 2015, Inventory of Selling Company Pace Sand Star Total Pace Company$2,000 $2,000 Sand Company $6,000 $9,000 15,000 Star Company4,000 4,000 Total $10,000 $2,000 $9,000 $21,000
Income from each company’s independent operations (including sales to affiliates) for the year ended December 31, 2015, is presented here:
Pace Company $200,000 Sand Company 150,000 Star Company 125,000
Required: A. Prepare in general journal form the workpaper entries necessary to eliminate intercompany sales and inter-company profit in the December 31, 2015, consolidated financial statements wallpaper.
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 the consolidated income
Expert Answer:
Part A 1 Sales 225000 Purchases Cost of Goods Sold To eliminate intercompany ... View the full answer
