E 5-6 Upstream and downstream sales 1. Pam Corporation owns 70 percent of Sun Company’s common stock, acquired January 1, 2017. Patents from the investment are being amortized at a rate of $20,000 per year. Sun regularly sells merchandise to Pam at 150 percent of Sun’s cost. Pam’s December 31, 2017, and 2018 inventories include goods purchased intercompany of $112,500 and $33,000, respectively. The separate incomes (do not include investment income) of Pam and Sun for 2018 are summarized as follows:

Pam Sun Sales $1,200,000 $800,000 Cost of sales (600,000) (500,000)

Other expenses (400,000) (100,000)

Separate incomes $ 200,000 $200,000 Total consolidated income should be allocated to controlling and noncontrolling interest shares in the amounts of:

a $344,550 and $61,950, respectively b $358,550 and $60,000, respectively c $346,500 and $60,000, respectively d $346,500 and $67,950, respectively