1)Petunia Company acquired an 80% interest in Shaman Company in 2016. In 2017 an
ID: 2458820 • Letter: 1
Question
1)Petunia Company acquired an 80% interest in Shaman Company in 2016. In 2017 and 2018, Shaman reported net income of $400,000 and $480,000, respectively. During 2017, Shaman sold $80,000 of merchandise to Petunia for a $20,000 profit. Petunia sold the merchandise to outsiders during 2018 for $140,000. For consolidation purposes, what is the noncontrolling interest’s share of Shaman's 2017 and 2018 net income?a) $90,000 and $96,000. b) $100,000 and $76,000. c) $84,000 and $92,000. d) $76,000 and $100,000.
2)P Company regularly sells merchandise to its 80%-owned subsidiary, S Corporation. In 2016, P sold merchandise that cost $240,000 to S for $300,000. Half of this merchandise remained in S’s December 31, 2016 inventory. During 2017, P sold merchandise that cost $375,000 to S for $468,000. Forty percent of this merchandise inventory remained in S’s December 31, 2017 inventory. Selected income statement information for the two affiliates for the year 2017 is as follows:
P S Sales Revenue $2,250,000 $1,125,000 Cost of Goods Sold 1,800,000 937,500 Gross profit $450,000 $187,500
Consolidated cost of goods sold for P Company and Subsidiary for 2017 are:
a) $2,260,500. b) $2,268,000. c) $2,276,700. d) $2,737,500.
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1)Petunia Company acquired an 80% interest in Shaman Company in 2016. In 2017 and 2018, Shaman reported net income of $400,000 and $480,000, respectively. During 2017, Shaman sold $80,000 of merchandise to Petunia for a $20,000 profit. Petunia sold the merchandise to outsiders during 2018 for $140,000. For consolidation purposes, what is the noncontrolling interest’s share of Shaman's 2017 and 2018 net income?
a) $90,000 and $96,000. b) $100,000 and $76,000. c) $84,000 and $92,000. d) $76,000 and $100,000.
2)P Company regularly sells merchandise to its 80%-owned subsidiary, S Corporation. In 2016, P sold merchandise that cost $240,000 to S for $300,000. Half of this merchandise remained in S’s December 31, 2016 inventory. During 2017, P sold merchandise that cost $375,000 to S for $468,000. Forty percent of this merchandise inventory remained in S’s December 31, 2017 inventory. Selected income statement information for the two affiliates for the year 2017 is as follows:
P S Sales Revenue $2,250,000 $1,125,000 Cost of Goods Sold 1,800,000 937,500 Gross profit $450,000 $187,500
Consolidated cost of goods sold for P Company and Subsidiary for 2017 are:
a) $2,260,500. b) $2,268,000. c) $2,276,700. d) $2,737,500.
Please show the work so I can learn from that...please thanks
1)Petunia Company acquired an 80% interest in Shaman Company in 2016. In 2017 and 2018, Shaman reported net income of $400,000 and $480,000, respectively. During 2017, Shaman sold $80,000 of merchandise to Petunia for a $20,000 profit. Petunia sold the merchandise to outsiders during 2018 for $140,000. For consolidation purposes, what is the noncontrolling interest’s share of Shaman's 2017 and 2018 net income?
a) $90,000 and $96,000. b) $100,000 and $76,000. c) $84,000 and $92,000. d) $76,000 and $100,000.
2)P Company regularly sells merchandise to its 80%-owned subsidiary, S Corporation. In 2016, P sold merchandise that cost $240,000 to S for $300,000. Half of this merchandise remained in S’s December 31, 2016 inventory. During 2017, P sold merchandise that cost $375,000 to S for $468,000. Forty percent of this merchandise inventory remained in S’s December 31, 2017 inventory. Selected income statement information for the two affiliates for the year 2017 is as follows:
P S Sales Revenue $2,250,000 $1,125,000 Cost of Goods Sold 1,800,000 937,500 Gross profit $450,000 $187,500
Consolidated cost of goods sold for P Company and Subsidiary for 2017 are:
a) $2,260,500. b) $2,268,000. c) $2,276,700. d) $2,737,500. 2)P Company regularly sells merchandise to its 80%-owned subsidiary, S Corporation. In 2016, P sold merchandise that cost $240,000 to S for $300,000. Half of this merchandise remained in S’s December 31, 2016 inventory. During 2017, P sold merchandise that cost $375,000 to S for $468,000. Forty percent of this merchandise inventory remained in S’s December 31, 2017 inventory. Selected income statement information for the two affiliates for the year 2017 is as follows:
P S Sales Revenue $2,250,000 $1,125,000 Cost of Goods Sold 1,800,000 937,500 Gross profit $450,000 $187,500
Consolidated cost of goods sold for P Company and Subsidiary for 2017 are:
a) $2,260,500. b) $2,268,000. c) $2,276,700. d) $2,737,500.
Please show the work so I can learn from that...please thanks
Explanation / Answer
1) Answer D: $ 76,000 and 100,000 /-
Reported profit of 2017: 400,000 less margin on inter company transaction : 20,000
Net Income for consolidation: 380,000/-
Non controlling interest : 380,000 * .20 = 76,000/-
Reported profit of 2018: 480,000 add margin on inter company transaction on subsequent sale : 200,000
Net Income for consolidation: 500,000/-
Non controlling interest : 500,000 * .20 = 100,000/-
2. Consolidated cost of goods sold
Answer: c 2,276,700
Cost of goods sold in 2017 include 50 % of inventory in 2016 . Stock reserve created for 50 % inventory: (300,000 -240,000 /2 = (60,000 * .5) Now reversed = 30,000
Cost of inventory acquired in 2017 andsubsequntly sold: 468,000 * . .6 280,800
Unsold inventory on hand: 187,200 : Stock reserve created: 187,200 * 37,200
Total cost of goods sold = 1,800,00 + 9,37,500 = 2,737,500/-
Less : Cost frominter company purchase 468,000/-
Ne Cost of goods sold 2,269,500/-
Less: Opening stock reserve 30,000/-
Add: Closing stock reserve 37,200/-
$ 2,276,700/-
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