Lowell Company has owned 100 percent of Rich Company since 2009. The income statements of these two companies for the year ended December 31, 2010, follow.

The following is additional information: (1) Rich Company purchased $560,000 of inventory from Lowell Company, which it had sold to Rich customers by the end of the year. (2) Rich Company leased its building from Lowell Company for $120,000 per year. Prepare a consolidated income statement work sheet for the two companies for the year ended December 31, 2010. Income taxes have been ignored.

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Lowell Rich Company Company Net sales $3,000,000 $1,200,000 Cost of goods sold 800,000 1,500,000 $ 400,000 $ 100,000 Gross margin $1,500,000 $ 500,000 Less: Selling expenses General and administrative expenses 600,000 200,000 $ 300,000 $ 100,000 Total operating expenses $1,100,000 $ 400,000 Income from operations Other income 120,000 $ 520,000 $ 100,000 Net income