Question: PROBLEM 6-4 Upstream and Downstream Sales Pace Company owns 85% of the outstanding common stock of Sand Company and all the outstanding common stock of
PROBLEM 6-4 Upstream and Downstream Sales Pace Company owns 85% of the outstanding common stock of Sand Company and all the outstanding common stock of Star Company. During 2012, the affiliates engaged in intercompany sales as follows:
Sales of Merchandise:
Pace to Sand $ 40,000
Sand to Pace 60,000
Sand to Star 75,000
Star to Pace 50,000
$40,000 + 60,000 + 75,000 + 50,000 = $225,000
The following amounts of intercompany profits were included in the December 31, 2011, and December 31, 2012, inventories of the individual companies:
Intercompany Profit in December 31, 2011, Inventory of
Selling Co. Pace Sand Star Total
Pace Co. $7,000 $7,000
Sand Co. $5,000 $3,000 $8,000
Star. Co. $8,000 $8,000
Total $13,000 $7,000 $3,000 $23,000
Intercompany Profit in December 31, 2012, Inventory of
Selling Co. Pace Sand Star Total
Pace Co. $2,000 $2,000
Sand Co. $6,000 $9,000 $15,000
Star Co. $4,000 $4,000
Total $10,000 $2,000 $9,000 $21,000
Income from each companys independent operations (including sales to affiliates) for the year ended December 31, 2012, 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 intercompany profit in the December 31, 2012, 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
Come anyone help me, please?
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