Akers Company, a 100% owned subsidiary of Muhs Corporation, sells inventory to M

Question

Akers Company, a 100% owned subsidiary of Muhs Corporation, sells inventory to Muhs at a 30% profit on selling price. The following data are available pertaining to inter-company purchases by Muhs:

Inter-company sales:

Unsold at year end based on selling price:

2014:

$ 9,600

2014:

$1,440

2015:

$14,400

2015:

$4,800

2016:

$18,000

2016:

$3,600

Aker's profit numbers were $84,000, $102,000 and $112,800 for 2014, 2015, and 2016, respectively. Muhs received dividends from Akers of $12,000 for 2014 and 2015, and $18,000 for 2016.

What is the balance in Equity Income for 2016?

Select one:

a. $102,000

b. $114,240

c. $112,800

d. $113,160

Inter-company sales:

Unsold at year end based on selling price:

Explanation / Answer

For 2016, Akers' Income is $ 112,800 Dividends Paid are $ 18,000 Net Income is $ 94,800 Add : Inter-Company Sales of $ 18,000 Hence, the balance in Equity Income is $ 112,800.

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