A parent and its subsidiary engage in intercompany merchandise transactions. Information on these transactions for 2020 is as follows:

Total sales from the parent to the subsidiary were $325,000.

Total sales from the subsidiary to the parent were $625,000.

The subsidiarys beginning inventory contained $93,000 in merchandise purchased from the parent.

The parents beginning inventory contained $113,050 in merchandise purchased from the subsidiary.

The subsidiarys ending inventory contained $80,600 in merchandise purchased from the parent.

The parents ending inventory contained $97,580 in merchandise purchased from the subsidiary.

Parent sells merchandise to Subsidiary at a markup of 24% on cost. Subsidiary sells merchandise to Parent at a markup of 19% on cost.

The parent and its subsidiary also engaged in the following intercompany equipment sales.

At the beginning of 2019, the parent sold equipment with a 10-year remaining life and a book value of $65,000 to the subsidiary for $45,000. The parent originally purchased the equipment for $95,000. The subsidiary still holds the equipment at the end of 2020.

At the beginning of 2019, the subsidiary sold equipment with a 5-year remaining life and a book value of $95,000 to its parent for $105,000. The subsidiary originally purchased the equipment for $130,000. The parent still holds the equipment at the end of 2020.

REQUIRED:

a. Prepare the eliminating entries (I) for the 2020 consolidation working paper for the above intercompany transactions.

b. Assume subsidiary reported net income of $4,150,000, determine Equity in Subsidiary Net Income and Noncontrolling Interest in Subsidiary Net Income for 2020.

c. Now assume that in each case, the equipment was sold to an outside company at the end of 2021. Repeat the requirements of part (a) for intercompany equipment sales.

d. Now assume that in each case, the equipment was sold to an outside company at the beginning of 2025. Repeat the requirements of part (a) intercompany equipment sales.