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McDuff Company owns 100 percent of the stock of Goode Company

McDuff Company owns 100 percent of the stock of Goode Company. The separate income statements for the two companies for the year ended December 31, 20x7, are as follows:

 

 

McDuff Company

Goode Company

Sales

$800,000

 

$500,000

 

Cost of goods sold

   650,000

 

  396,000

 

Gross margin

$150,000

 

$104,000

 

Operating expenses, including rent

(86,000)

 

(48,000)

 

Rental revenue

56,000

 

 

Income taxes expense

(44,000)

 

  (22,000)

 

Net income

$  76,000

 

$  34,000

 

         

 

McDuff Company sold merchandise to Goode Company for $120,000, which in turn was sold by Goode Company to its customers. Goode Company paid rentals of $18,000 to McDuff Company on a long-term lease. Using the partially completed form that follows, prepare a consolidated income statement for the year ended December 31, 20x7.

 

McDuff Company

Consolidated Income Statement

For the Year Ended December 31, 20x7

Sales

 

Cost of goods sold

 

Gross margin

 

Operating expenses

 

Rental revenue

 

Income taxes expense

 

Net income

 

   

 

 

 

171.Pierce Company owns 100 percent of the stock of Sloan Company. The separate income statements for the two companies for the year ended December 31, 20x7, are as follows:

 

 

Pierce Company

Sloan Company

Sales

$900,000

 

$600,000

 

Cost of goods sold

   650,000

 

  396,000

 

Gross margin

$250,000

 

$204,000

 

Operating expenses, including rent

(86,000)

 

(48,000)

 

Rental revenue

56,000

 

 

Income taxes expense

(44,000)

 

(22,000)

 

Net income

$176,000

 

$134,000

 

         

 

Pierce Company sold merchandise to Sloan Company for $100,000, which in turn was sold by Sloan Company to its customers. Sloan Company paid rentals of $20,000 to Pierce Company on a long-term lease. Using the partially completed form that follows, prepare a consolidated income statement for the year ended December 31, 20x7.

 

Pierce Company

Consolidated Income Statement

For the Year Ended December 31, 20x7

Sales

 

Cost of goods sold

 

Gross margin

 

Operating expenses

 

Rental revenue

 

Income taxes expense

 

Net income

 

Jan 11 2020 View more View Less

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