E $5-7$

Determine consolidated net income with downstream intercompany sales

Pam Corporation owns an $80$ percent interest in the common stock of Sam Corporation, acquired several years ago at

book value. Pam regularly sells merchandise to Sam. Information relevant to the intercompany sales and profits of Pam

and Sam for $2011,2012,$ and $2013$ is as follows:

REQUIRED: Prepare a schedule showing consolidated net income for each year.