1. On January 1, 20X7, HEY Co. acquired 80% of the ordinary voting shares of BYE Inc. Both entities have a December 31 fiscal year end. During 20X7, HEY paid $225,000 to BYE as management fees, and BYE loaned $144,000 to HEY.

Which of the following statements describes the impact on the consolidated Income Statement?

20. $225,000 in management fees will be added to revenues as an adjustment on the consolidated Income Statement.
21. Consolidated net income will be less than the sum of the parent and subsidiarys net income due to the intercompany transactions.
22. Consolidated retained earnings attributable to the parent will be $180,000 higher than would be the case had the management fees not been charged.
23. Consolidated expenses will be less than the sum of the parent and subsidiarys expenses due to the intercompany transactions.

2. ABC Co. owns a 40% interest in XYZ Ltd., a joint venture. Information for these two entities for the year ended July 31, 20X4, is as follows:

Sales	ABC Co. $5,000,000	XYZ Ltd. $3,900,000
Net income	1,500,000	800,000

During the year, XYZ had sales of $20,000 to ABC and earned a gross margin of 40% on these sales. At year end, ABC had resold 50% of these goods.

During the year, ABC had sales of $60,000 to XYZ and earned a gross margin of 50% on these sales. At year end, none of these goods had been resold.

Both companies tax rate is 30%.

What will be the total sales reported on Abbas final statement of income and comprehensive income for the year ended July 31, 20X4?

a) $4,940,000

b) $5,000,000

c) $6,480,000

d) $6,560,000