Blackwood Enterprises owns 80 percent of the voting stock of Grange Corporation. Blackwood purchased the shares on January \(1,20 \mathrm{X} 4\), for \(\$ 234,500\), at which time Grange reported common stock outstanding of \(\$ 200,000\) and retained earnings of \(\$ 50,000\). The book values of all Grange's assets were equal to their market values, except for buildings with a fair value \(\$ 30,000\) greater than book value at the date of combination. The buildings had an expected 10 -year remaining economic life from the date of combination. On December 31, 20X6, the management of Blackwood Enterprises reviewed the amount attributed to goodwill as a result of its purchase of Grange Corporation common stock and concluded an impairment loss of \(\$ 7,500\) should be recorded in 20X6.

The following trial balances were prepared by the companies on December 31, 20X6:

Blackwood purchases much of its inventory from Grange. The inventory held by Blackwood on January 1, 20X6, contained \(\$ 2,000\) of unrealized intercompany profit. During 20X6, Grange sold goods costing \(\$ 50,000\) to Blackwood for \(\$ 70,000\). Blackwood resold 70 percent of the inventory in 20X6 and the remaining 30 percent in 20X7.
On January 1, 20X6, Blackwood Enterprises purchased from Kirkwood Corporation \(\$ 100,000\) par value bonds of Grange Corporation. The bonds had been sold to Kirkwood Corporation on January 1,20X1, with a 10 -year maturity. The coupon rate is 9 percent, and interest is paid annually on December 31 .
\section*{Required}
Select the correct answer for each of the following questions.
1. What should be the total amount of inventory reported in the consolidated balance sheet as of December 31, 20X6?

a. \(\$ 360,000\).

b. \(\$ 374,000\).

c. \(\$ 375,200\).

d. \(\$ 380,000\).
2. What amount of cost of goods sold should be reported in the \(20 \mathrm{X} 6\) consolidated income statement?

a. \(\$ 288,000\).

b. \(\$ 294,000\).

c. \(\$ 296,000\).

d. \(\$ 360,000\).
3. What amount of interest income did Blackwood Enterprises record from its investment in Grange Corporation bonds during 20X6?

a. \(\$ 7,400\).

b. \(\$ 7,720\).

c. \(\$ 9,000\).

d. \(\$ 10,600\).
4. What amount of interest expense should be reported in the 20X6 consolidated income statement?

a. \(\$ 24,000\).

b. \(\$ 32,000\).

c. \(\$ 33,000\).

d. \(\$ 40,000\).
5. What is the unamortized balance of the purchase differential as of January 1, 20X6?

a. \(\$ 19,200\).

b. \(\$ 29,700\).

c. \(\$ 32,100\).

d. \(\$ 34,500\).
6. What amount of depreciation and amortization should be reported in the 20X6 consolidated income statement?

a. \(\$ 77,600\).

b. \(\$ 80,000\).

c. \(\$ 82,400\).

d. \(\$ 83,450\).

7. What amount of gain or loss on bond retirement should be included in the 20X6 consolidated income statement?

a. \(\$ 2,400\).

b. \(\$ 3,000\).

c. \(\$ 4,000\).

d. \(\$ 6,400\).
8. What amount of income should be assigned to the noncontrolling interest in the 20X6 consolidated income statement?

a. \(\$ 6,720\).

b. \(\$ 7,200\).

c. \(\$ 8,000\).

d. \(\$ 8,400\).
9. What amount should be assigned to the noncontrolling interest in the consolidated balance sheet as of December 31, 20X6?

a. \(\$ 63,200\).

b. \(\$ 63,320\).

c. \(\$ 63,800\).

d. \(\$ 65,000\).
10. What amount of goodwill, if any, should be reported in the consolidated balance sheet as of December 31, 20X6?

a. \(\$ 0\).

b. \(\$ 3,000\).

c. \(\$ 10,500\).

d. \(\$ 27,000\)

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Blackwood Enterprises Grange Corporation Cash Inventory Item Buildings and Equipment Investment in Grange Corporation Bonds Investment in Grange Debit Credit Debit Credit $ 194,220 200,000 500.000 $183,000 180.000 400,000 106.400 Corporation Stock 287,300 Cost of Goods Sold 220,000 140,000 Depreciation and Amortization 50,000 30.000 Interest Expense 24.000 16,000 Other Expenses 16.000 14.000 Dividends Declared 20.000 15.000 Accumulated Depreciation $ 250.000 $180,000 Current Liabilities 100.000 50,000 Bonds Payable 400.000 200,000 Bond Premium Common Stock 300,000 Retained Earnings 202,400 Sales 300.000 8.000 200.000 100,000 240,000 Other Income 35.920 Income from Subsidiary 29.600 Total $1,617.920 $1,617,920 $978,000 $978.000