Polonia Company has owned 100 per cent of Cardwell Company since 20x0. The income statements of these two companies for the year ended December 31, 20x1 appear below. Also assume the following information:

(a) Cardwell Company purchased 560,000 of inventory from Polonia Company, which had been sold to Cardwell Company customers by the end of the year. (b)

Cardwell Company leased its building from Polonia Company for 120,000 per year. Prepare a consolidated income statement work sheet for the two companies for the year ended December 31, 20x1. Ignore income taxes.

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Polonia Company Cardwell Company Net Sales 3,000,000 1,200,000 Cost of Goods Sold 1,500,000 800,000 Gross Profit 1,500,000 400,000 Less: Selling Expenses 500,000 100,000 General and Administrative Expenses 600,000 200,000 Total Operating Expenses 1,100,000 300,000 Profit from Operations 400,000 100,000 Other Income 120,000 Net Profit 520,000 100,000