requierment: consolidate Parent and Subsidiary:

*At the bottom of your worksheet is an amount of Intercompany Sales, from Subsidiary to Parent. Those sales were made to generate a gross profit at the percentage indicated with the intercompany sales amount. Just to be clear, the Intercompany Sales amount is at the selling price from Subsidiary to Parent

*Of the intercompany sales, one-half of the sales remain in Parent Companys inventory (part of Current Assets). Round if you must, do everything in whole dollars. Make appropriate adjustments for the inventory.

*Parent Company charges a management fee to Subsidiary Company (related to services that Parent Company performs for Subsidiary). The fee is 1.5% of Subsidiarys sales. Subsidiary records the expense in Administrative expense. Parent Company records the income in Other Expense (since its income, it reduces the Other expense amount)

928,140 6,789,465 (116,250) 4,285,208 757,950 12,644,513 SUBSIDIARY COMPANY Statement of Financial Position Current assets PP&E Accumulated depreciation Goodwill Patents and other noncur. 1 Investment in SubCo 2 Total assets 3 Current liabilities Noncurrent liabilities Common stock Retained earnings 3 Total liabilities and equity 2 . 1 Statement of Income 2 Sales 3 Cost of goods sold Administrative expense 5 Technology expense Marketing expense Equity income SubCo 3 Other expense Income tax expense . 1 Net Income (205,763) (2,348,250) (9,765,000) (325,500) (12,644,513) (11,625,000) 5,766,000 697,500 2,790,000 1,023,000 930,000 93,000 (325,500) 22 PARENT COMPANY Statement of Financial Position Current assets PP&E Accumulated depreciation Goodwill Patents and other noncur. Investment in SubCo - Total assets 2,345,300 17,156,175 (7.293,750) 10,828,213 8,915,250 10,090,500 42,041,688 Current liabilities Noncurrent liabilities Common stock Retained earnings Total liabilities and equity (519,938) (5,933,750) (24,675,000) (10,913,000) (42,041,688) Statement of Income Sales Cost of goods sold Administrative expense Technology expense Marketing expense Equity income SubCo = Other expense Income tax expense (29,049,500) 14,570,000 1,762,500 7,050,000 2,585,000 (325,500) 2,350,000 235,000 Net Income (822,500) Sub gross profit (interco sales) Intercompany Sales 60% 581,250