Winter Corporation owns 80 percent of the stock of Ray Guard Corporation and 90 percent of the stock of Block Company. The companies file a consolidated tax return each year and in 20X5 paid a total tax of \(\$ 80,000\). Each of the companies is involved in a number of intercompany inventory transfers each period. Information on the activities of the companies for 20X5 is as follows:

\section*{Required}

a. Determine the amount of income tax expense that should be assigned to each company.

b. Compute consolidated net income for 20X5.

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20X5 Reported Operating 20X4 Intercompany Profit 20X5 Intercompany Profit Not Company Income Realized in 20X5 Realized in 20X5 Winter Corporation $100,000 $40,000 $10,000 Ray Guard Corporation 50.000 20.000 Block Company 30,000 20,000 10,000