Petronet sells merchandise to its 80-percnet subsidiary Sonata at a markup of 20 percent on cost. During 2017, Petronet charges Sonata \($4,000,000\) for merchandise sales. Sonata’s 2017 beginning inventory contains \($540,000\) in merchandise purchased from Petronet. Sonata’s 2017 ending inventory contains \($480,000\) in merchandise purchased from Petronet. Petronet uses the complete equity method to record its investment in Sonata. How are Petronet’s 2017 equity in net income of Sonata and 2017 consolidated income to the noncontrolling interest affected by intercompany merchandise transactions?

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a b. C. d. Equity in net income $10,000 increase $ 8,000 increase $12,000 increase $ 9,600 increase Noncontrolling interest in net income $0 $2,000 increase $0 $2,400 increase