8:22 AM Bunker Harrison Corporation Company Total sales Sales to Harrison Compan

ID: 2610282 • Letter: 8

Question

8:22 AM Bunker Harrison Corporation Company Total sales Sales to Harrison Company Sales to Bunker Corporation Net income Operating income (excluding investment income from $ 693,000 $ 531.000 142,100 242,100 25,000 75,000 Harrison) Inventory on hand, December 31, 20X8, purchased from: Harrison Company 48,420 42,630 Bunker regularly prices its products at cost plus a 40 percent markup for profit. Harrison prices its sales at cost plus a 20 percent markup. The total sales reported by Bunker and Harrison include both intercompany sales and sales to nonaffiliates. Required: a. What amount of sales will be reported in the consolidated income statement for 20X8? nt of sales 839,800 3 4 5 6 7 9

Explanation / Answer

(a). Amount of sales to be reported in consolidated income statement;

Total sales of Bunker Corporation

$693000

Total sales of Harrison Company

$531000

Total sales

$1224000

Less: Sales to be eliminated ($142100 + $242100)

($384200)

Amount of sales to be reported in consolidated income statement

$839800

(b). Amount of cost of goods sold to be reported in consolidated income statement;

Cost of goods sold of Bunker Corporation ($693000 / 1.40)

$495000

Cost of goods sold of Harrison Company ($531000 / 1.20)

$442500

Total cost of goods sold

$937500

Less: Amount to be eliminated ($142100 + $242100 – $8070 – $12180))

($363950)

Amount of cost of goods sold to be reported in consolidated income statement

$573550

(c). Consolidated net income and income to controlling interest;

Operating income of Bunker Corporation (excluding income from Harrison Company)

$75000

Net income of Harrison Company

$25000

Total income

$100000

Less: Unrealized profits ($8070 + $12180)

($20250)

Consolidated net income

$79750

Less: Income assigned to noncontrolling interest ($25000 – $8070) * .20

($3386)

Income to controlling interest

$76364

(d). Inventory to be reported in consolidated income statement;

Total inventory ($48420 + $42630)

$91050

Less: Unrealized profits ($8070 + $12180)

($20250)

Inventory to be reported in consolidated income statement

$70800