Required:

1. Do a determination and distribution schedule.

2. Make all the necessary elimination entries (for 2014).

3. Using the journal entries, calculate the income for Parent company and sub company. Perform an income distribution.

$425,000 ($10,000 of common stock, $90,000 additional paid-in capital and $325,000 retained earnings). Book values and fair value market for Saturn's assets and liabilities were the same except for the following: Book Value Fair Market Value Inventory Building Equipment Land Patent Bonds Payable $175,000 $350,000 $160,000 $100,000 $125,000 $600,000 $160,000 $480,000 (20 years) $150,000 (5 years) $300,000 $450,000 (10 years) $540,000 (5 years) Any other excess is due to Goodwill Fixed asset sales On January 1, 2012 Pluto sold equipment to Saturn with a book value of $40,000 for $30,000, the equipment will last for five years On January 1, 2013 Saturn sold equipment to Pluto with a book value of $60,000 for $75,000, the equipment will last for five years Intercompany sales and intercompany receivables and payables . During 2014 Pluto had sales of $160,000 to Saturn with a 28% gross profit, Saturn still owes Pluto $9,000 at the end of 2014 During 2014 Saturn had sales of $275,000 to Pluto with a 32% gross profit, Pluto still owes Saturn $12,000 at the end of 2014 Ending Inventory Saturn had $25,000 of the inventory it purchased from Pluto in its 2014 ending inventory Pluto had $30,000 of the inventory it purchased from Saturn in its 2014 ending inventory Beginning Inventory Saturn had $20,000 of the inventory it purchased from Pluto in its 2013 ending inventory (2014 beginning inventory) with a 31% gross profit Pluto had $32,000 of the inventory it purchased from Saturn in its 2013 ending inventory (2014 beginning inventory) with a 35% gross profit Investment in Sub and Retained Earnings At the end of 2014, Pluto's Investment in Sub account had a balance of $1,564,000 Before closing out 2014's net income and dividends, Saturn's retained earnings' balance was $685,000 Net Income and Dividends Pluto's net income on its own in 2014 was $465,000 and paid $125,000 in dividends Saturn's net income on its own in 2014 was $160,000 and paid $65,000 in dividends $425,000 ($10,000 of common stock, $90,000 additional paid-in capital and $325,000 retained earnings). Book values and fair value market for Saturn's assets and liabilities were the same except for the following: Book Value Fair Market Value Inventory Building Equipment Land Patent Bonds Payable $175,000 $350,000 $160,000 $100,000 $125,000 $600,000 $160,000 $480,000 (20 years) $150,000 (5 years) $300,000 $450,000 (10 years) $540,000 (5 years) Any other excess is due to Goodwill Fixed asset sales On January 1, 2012 Pluto sold equipment to Saturn with a book value of $40,000 for $30,000, the equipment will last for five years On January 1, 2013 Saturn sold equipment to Pluto with a book value of $60,000 for $75,000, the equipment will last for five years Intercompany sales and intercompany receivables and payables . During 2014 Pluto had sales of $160,000 to Saturn with a 28% gross profit, Saturn still owes Pluto $9,000 at the end of 2014 During 2014 Saturn had sales of $275,000 to Pluto with a 32% gross profit, Pluto still owes Saturn $12,000 at the end of 2014 Ending Inventory Saturn had $25,000 of the inventory it purchased from Pluto in its 2014 ending inventory Pluto had $30,000 of the inventory it purchased from Saturn in its 2014 ending inventory Beginning Inventory Saturn had $20,000 of the inventory it purchased from Pluto in its 2013 ending inventory (2014 beginning inventory) with a 31% gross profit Pluto had $32,000 of the inventory it purchased from Saturn in its 2013 ending inventory (2014 beginning inventory) with a 35% gross profit Investment in Sub and Retained Earnings At the end of 2014, Pluto's Investment in Sub account had a balance of $1,564,000 Before closing out 2014's net income and dividends, Saturn's retained earnings' balance was $685,000 Net Income and Dividends Pluto's net income on its own in 2014 was $465,000 and paid $125,000 in dividends Saturn's net income on its own in 2014 was $160,000 and paid $65,000 in dividends