A Company acquired control of B Company. Assume that any excess cost of A Company's investment in the subsidiary over book value is attributable to goodwill from consolidation.

Barr Company has owned 100 percent of Guido Company since 20x0. The income statements of these two companies for the year ended December 31, 20x1, follow. LO1

The following is additional information: (1) Guido Company purchased $560,000 of inventory from Barr Company, which it had sold to Guido customers by the end of the year. (2) Guido Company leased its building from Barr Company for $120,000 per year.
Prepare a consolidated income statement work sheet for the two companies for the year ended December 31, 20x1. Ignore income taxes.

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