Upstream Sales Peel Company owns 90% of the common stock of Seacore Company. Seacore Company sells merchandise to Peel Company at 20% above cost. During 2004 and 2005, such sales amounted to $436,000 and $532,000, respectively. At the end of each year, Peel Company had in its inventory one-fourth of the goods purchased from Seacore Company during that year.
Peel Company reported $300,000 in net income from its independent operations in 2004 and 2005. Seacore Company reported net income of $130,000 in each year and did not declare any dividends in any year. There were no intercompany sales prior to 2004. LO5 Required:
A. Prepare in general journal form all entries necessary on the consolidated financial statements workpaper to eliminate the effects of the intercompany sales for each of the years 2004 and 2005.
B. Calculate the amount of noncontrolling interest to be deducted from combined income in the consolidated income statement for 2005.
C. Calculate consolidated net income (controlling interest in combined income) for 2005.