For the current year ended September 30, the results of operations of Tennessee Corporation, and its wholly owned subsidiary, Volunteer Enterprises, are as follows:

During the year, Tennessee sold merchandise to Volunteer for $45,000. The merchandise was sold by Volunteer to nonaffiliated companies for $60,000. Tennessee€™s interest revenue was realized from a long-term loan to Volunteer.
a. Determine the amounts to be eliminated from the following items in preparing a consolidated income statement for the current year:
(1) Sales
(2) Cost of merchandise sold.
b. Determine the consolidated netincome.

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Tennessee Corporation Volunteer Enterprises Sales Cost of merchandise sold Selling expenses Administrative expenses Interest expenses (revenue) Net income $845,000 5390,000 125,000 $68,000 $166,000 47 000 34,000 16,000 10,000 10003300 (10,000) 592,000 $253,000 128,000 38,000