Farrow Corporation acquired 70 percent of the stock of Rand Company on January 1, 20X7, for \(\$ 300,000\). Other relevant data are as follows:

The excess of purchase price over book value was assigned to depreciable assets with a remaining economic life of five years.
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Select the correct answer for each of the following:
1. What amount of investment income will Farrow report for \(20 \times 7\) on its investment in Rand?

a. \(\$ 36,000\).

b. \(\$ 28,000\).

c. \(\$ 25,200\).

d. \(\$ 24,000\).
2. What amount of consolidated net income will be reported for \(20 \times 7\) ?

a. \(\$ 220,000\).

b. \(\$ 216,000\).

c. \(\$ 208,000\).

d. \(\$ 204,000\).
3. What amount of income will be assigned to the noncontrolling interest in the \(20 \mathrm{X} 7\) consolidated income statement?

a. \(\$ 66,000\).
b \(\$ 12,000\).

c. \(\$ 10,800\)

d. \(\$ 9,000\).
4. What amount will be reported as dividend payments by the consolidated entity for \(20 \mathrm{X} 7\) ?

a. \(\$ 45,000\).
b \(\$ 42,000\).

c. \(\$ 38,000\).

d. \(\$ 35,000\).
5. What amount will be reported as common stock outstanding in the consolidated balance sheet prepared at December 31, 20X7?

a. \(\$ 200,000\).

b. \(\$ 275,000\).

c. \(\$ 375,000\).

d. \(\$ 450,000\).
6. What amount will be reported in the consolidated balance sheet prepared at December 31, 20X7, as the balance in retained earnings?

a. \(\$ 240,000\).

b. \(\$ 390,000\).

c. \(\$ 409,000\).

d. \(\$ 589,000\).
7. What amount will Farrow show as its investment in Rand at December 31, 20X7?

a. \(\$ 300,000\).

b. \(\$ 317,000\).

c. \(\$ 314,000\).

d. \(\$ 328,000\).

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Farrow Rand Common stock outstanding $200,000 $250,000 Retained earnings, January 1, 20X7 240.000 150,000 Net income for 20X7 40,000 Operating income, excluding investment income 180.000 Dividends declared 35,000 10,000