Upstream Sales
Peel Company owns 90% of the common stock of Seacore Company. Seacore Company sells merchandise to Peel Company at 20% above cost. During 2011 and 2012, such sales amounted to $436,000 and $532,000, respectively. At the end of each year, Peel Company had in its inventory one-fourth of the goods purchased from Seacore Company during that year.
Peel Company reported $300,000 in net income from its independent operations in 2011 and 2012. Seacore Company reported net income of $130,000 in each year and did not declare any dividends in any year. There were no intercompany sales prior to 2011.
Required:
- Prepare in general journal form all entries necessary on the consolidated financial statements workpaper to eliminate the effects of the intercompany sales for each of the years 2011 and 2012.
- Calculate the amount of noncontrolling interest to be deducted from consolidated income in the consolidated income statement for 2012.
- Calculate controlling interest in consolidated income for 2012.