Preparing a consolidated income statement For the year ended December 31, 20Y2, the operating results of Paley Corporation and its wholly owned subsidiary, Sims Enterprises, are as follows: Sales Cost of goods sold Gross profit Operating expenses Operating income Interest revenue Interest expense Net income Sales During 20Y2, Sims Enterprises sold and received payment of $80,000 for merchandise that was purchased by Paley Corporation. The merchandise sold to Paley cost Sims Enterprises $45,000. Paley Corporation sold the merchandise to another (nonaffiliated) company for $110,000. Paley Sims Corporation Enterprises 3,200,000 900,000 (1,900,000) (550,000) 1,300,000 350,000 (750,000) (125,000) 550,000 225,000 20,000 a. Prepare a consolidated income statement for Paley Corporation and Subsidiary. Hint: Eliminate the effect of the intercompany sale. Cost of goods sold Gross profit 570,000 Paley Corporation and Subsidiary Consolidated Income Statement For the Year Ended December 31, 20Y2 Operating expenses Operating income Other revenue and expense: Interest revenue Net income (15,000) 210,000 Interest expense 2,300,000 X 1,855,000 X $ 3,120,000 X 2,360,000 X 760,000 X $ 115,000 X 20,000 X 110,000 X Incorrect

Preparing a consolidated income statement For the year ended December 31, 20Y2, the operating results of Paley Corporation and its wholly owned subsidiary, Sims Enterprises, are as follows: Sales Cost of goods sold Gross profit Operating expenses Operating income Interest revenue Interest expense Net income Sales During 20Y2, Sims Enterprises sold and received payment of $80,000 for merchandise that was purchased by Paley Corporation. The merchandise sold to Paley cost Sims Enterprises $45,000. Paley Corporation sold the merchandise to another (nonaffiliated) company for $110,000. Paley Sims Corporation Enterprises 3,200,000 900,000 (1,900,000) (550,000) 1,300,000 350,000 (750,000) (125,000) 550,000 225,000 20,000 a. Prepare a consolidated income statement for Paley Corporation and Subsidiary. Hint: Eliminate the effect of the intercompany sale. Cost of goods sold Gross profit 570,000 Paley Corporation and Subsidiary Consolidated Income Statement For the Year Ended December 31, 20Y2 Operating expenses Operating income Other revenue and expense: Interest revenue Net income (15,000) 210,000 Interest expense 2,300,000 X 1,855,000 X $ 3,120,000 X 2,360,000 X 760,000 X $ 115,000 X 20,000 X 110,000 X Incorrect

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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