Pie Bakery owns 60 percent of Slice Products Company’s stock. On January 1, 20X9, inventory reported by Pie included 20,000 bags of flour purchased from Slice at $9 per bag. By December 31, 20X9, all the beginning inventory purchased from Slice Products had been baked into products and sold to customers by Pie. There were no transactions between Pie and Slice during 20X9. Both Pie Bakery and Slice Products price their sales at cost plus 50 percent markup for profit. Pie reported income from its baking operations of $300,000, and Slice reported net income of $250,000 for 20X9.

Required

a. Compute the amount reported as cost of goods sold in the 20X9 consolidated income statement for the flour purchased from Slice in 20X8.

b. Give the consolidation entry or entries required to remove the effects of the unrealized profit in beginning inventory in preparing the consolidation worksheet as of December 31, 20X9.

c. Compute the amounts reported as consolidated net income and income assigned to the controlling interest in the 20X9 consolidated income statement.