Computing the amount of equity income and preparing [I] consolidation journal entries - Equity method Assume that a parent company sells inventory to its wholly owned subsidiary. The subsidiary, ultimately, sells the inventory to customers outside of the consolidated group. You have compiled the following data for the years ending 2012 and 2013: Subsidiary Net Income Intercompany Inventory Sales Gross Profit on Unsold Inventories Receivable (Payable) 2013 $300,000 $54,000 $16,000 $22,000 2012 $200,000 $44,000 $15,500 $17,000