Question - Payton Company owns 90% of the common stock of Sanders Company. Sanders Company sells merchandise to Payton Company at 25% above cost. During 2010 and 2011 such sales amounted to $800,000 and $1,020,000, respectively. At the end of each year, Payton Company had in its inventory one-fourth of the amount of goods purchased from Sanders Company during that year. Payton Company reported income of $1,500,000 from its independent operations in 2010 and $1,720,000 in 2011. Sanders Company reported net income of $600,000 in each year and did not declare any dividends in either year. There were no intercompany sales prior to 2010.
Required:
A. Prepare, in general journal form, all entries necessary on the 2011 consolidated statements workpaper to eliminate the effects of intercompany sales.
B. Calculate the amount of noncontrolling interest to be deducted from consolidated income in the consolidated income statement in 2011.
C. Calculate controlling interest in consolidated net income for 2011.