PROBLEM 6-4 Upstream and Downstream Sales LO 2 LO 5 Pace Company owns 85% of the outstanding common stock of Sand Compan

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Problem 6 4 Upstream And Downstream Sales Lo 2 Lo 5 Pace Company Owns 85 Of The Outstanding Common Stock Of Sand Compan 1 (62.37 KiB) Viewed 54 times

PROBLEM 6-4 Upstream and Downstream Sales LO 2 LO 5 Pace Company owns 85% of the outstanding common stock of Sand Company and all the outstanding common stock of Star Company. During 2020, the affiliates engaged in intercompany sales as follows: Sales of Merchandise The following amounts of intercompany profits were included in the December 31, 2019, and December 31, 2020, inventories of the individual companies: Selling Company Pace Company Sand Company Star Company Total Pace to Sand $ 40,000 Sand to Pace Sand to Star 60,000 75,000 50,000 Star to Pace $225,000 Selling Company Pace Company Sand Company Star Company Total Noncontrolling interest in consolidated income Controlling interest in consolidated income Intercompany Profit in December 31, 2019, Inventory of Pace Sand $7,000 Star Total $ 7,000 8,000 8,000 $ 5,000 8,000 $13,000 $7,000 $3,000 $23,000 Intercompany Profit in December 31, 2020, Inventory of Pace Sand Star Total $2,000 $ 6,000 4,000 $10,000 $2,000 Income from each company's independent operations (including sales to affiliates) for the year ended December 31, 2020, is presented here: Pace Company $200,000 Sand Company 150,000 Star Company 125,000 $3,000 $9,000 $9,000 $ 2,000 15,000 4,000 $21,000 Required: A. Prepare in general journal form the workpaper entries necessary to eliminate intercompany sales and intercompany profit in the December 31, 2020, consolidated financial statements workpaper. B. Calculate the balance to be reported in the consolidated income statement for the following line items: Consolidated income