Bunker Corporation owns 80 percent of Harrison Companys stoc

Bunker Corporation owns 80 percent of Harrison Company\'s stock. At the end of 20X8, Bunker and Harrison reported the following partial operating results and inventory balances: Bunker Harrison Corporation Company $693,000 $531,000 Total sales Sales to Harrison Company Sales to Bunker Corporation Net income Operating income (excluding investment income from Harrison) Inventory on hand, December 31, 20X8, purchased from: 142,100 242,100 25,000 75,000 48,420 Harrison Company Bunker Corporation 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. a. What amount of sales will be reported in the consolidated income statement for 20X8? What amount of cost of goods sold will be reported in the 20X8 consolidated income statement? (Do not round intermediate calculations.) b. lof cost of goods $569,490

Solution

a. Sales reported in the Consolidated Income statement for 20X8 693000+531000-142100-242100= 839800 Workings: Bunker Sales to Harrison 142100 G/P margin(40/140)*142100 40600 COGS 101500 Harrison Sales to Bunker 242100 G/P margin(20/120)*242100 40350 COGS 201750 b. COGS reported in Cos.Inc.stat.20X8 Bunker--100/140*(693000-142100)= 393500 Harrison--100/120*(531000-242100)= 240750 Total COGS to be reported 634250 c. Bunker (75000-40600) 34400 Harrison(80%*25000)-40350 -20350 Consolidated net income 14050 Income to controlling interest (20%*25000) 5000 d.. Inventory balance in Cons. Inc.stat. Inventory in Bunker=100/120*48420 40350 Inventory in Harrisons=100/140*42630 30450 70800