Reference no: EM132067188
ADVANCED ACCOUNTING QUESTION -
Show your calculations in the yellow-shaded cells provided for each item. You can insert rows within these yellow-shaded cells as you need them.
Gargiulo Company, a 90% owned subsidiary of Posito Corporation, sells inventory to Posito at a 25% profit on selling price. The following data is available pertaining to intra-entity purchases. Gargiulo was acquired on January 1, 2012.
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2012
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2013
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2014
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Purchases by Posito
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$8,000
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$12,000
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$15,000
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Ending inventory on Posito's books
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1,200
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4,000
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3,000
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Assume the equity method is used. The following data is available pertaining to Gargiulo's income and dividends.
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2012
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2013
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2014
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Gargiulo's net income
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$70,000
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$85,000
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$94,000
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Dividends paid by Gargiulo
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10,000
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10,000
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15,000
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a. Compute the equity in earnings of Gargiulo reported on Posito's books for 2012.
b. Compute the equity in earnings of Gargiulo reported on Posito's books for 2013.
c. Compute the equity in earnings of Gargiulo reported on Posito's books for 2014.
d. Compute the non-controlling interest in Gargiulo's net income for 2012.
e. Compute the non-controlling interest in Gargiulo's net income for 2013.
f. Compute the non-controlling interest in Gargiulo's net income for 2014.
g. For consolidation purposes, what amount would be debited to January 1 retained earnings for the 2012 consolidation worksheet entry with regard to the unrealized gross profit of the 2012 intra-entity transfer of merchandise?