Distribution of income with inventory pro?ts. Nick Company is an 80%-owned subsidiary of Van Corporation. The separate income statements of the two companies for 20X2 are as follows:
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Van Corporation
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Nick Company
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Sales .
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$ 220,000
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$120,000
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Cost of goods sold.
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(150,000)
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(90,000)
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Gross pro?t
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$ 70,000
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$ 30,000
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Other expenses .
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(40,000)
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(12,000)
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Other income
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5,000
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Operating income. .
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$ 35,000
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$ 18,000
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Subsidiary income
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14,400
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Net income
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$ 49,400
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$ 18,000
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The following facts apply to 20X2:
a. Nick Company sold $70,000 of goods to Van Corporation. The gross pro?ts on sales to Van and to unrelated companies are equal and have not changed from the previous years.
b. Van Corporation held $15,000 of the goods purchased from Nick Company in its beginning inventory and $20,000 of such goods in ending inventory.
c. Van Corporation billed Nick Company $5,000 for computer services. The charge was expensed by Nick Company and treated as other income by Van Corporation.
Prepare the consolidated income statement for 20X2, including the distribution of the consolidated net income to the controlling and noncontrolling interests. The supporting income distribution schedules should be prepared as well.