Assign 2 question # 2

[Helene Lapierre]

 

I am not getting the same answer as the folks on Blackboard... where is the 21,000 addition to Inventory coming from

Helene

Thanks

 

 

 

 

90% investment in Sat
Intercompany Sales and Purchases
A/R A/P				40,000
Intercompany Sales  Year 3				180,000
Intercompany Profit and Losses
			before	Tax @	After
Opening Inventory			tax	40%	Tax
upstream sales
60,000/(1+.30)=C	46154	60,000-46154	13,846	5,538	8,308
Ending Inventory
upstream sales
70,000/(1+.30)=c	53,846	70,000-53846	16154	6,462	9,692
			30,000	12,000	18,000
Account	Details of Amounts		Balance
Inventory	500,000 +300,000
Acc. Pble	600,000+320,000-40,000		880,000
R/E Opening	2,400,000 + 800,000
Sales	4,000,000+2,500,000-180,000		6,320,000
COGS	3,100,000+1,700,000-180,000		4,620,000
Income tx exp	80,000+50,000
			11,820,000

 

[Ruby Lal]

Thanks Helene that's exactly what im getting - i'm calculating the actual GP vs using the Markup as the GP the $21k addition is 70k*.30.  

My balances are slightly different - for inventory i have adjusted for the ending and same for COGS . For part 2 do you what they are looking for?

		Pat	Sat	Adjust	Consolidated
Inventory		500,000	300,000	(16,154)	783,846
Accounts payable		600,000	320,000	(40,000)	880,000
Retained Earnings		2,400,000	1,100,000		3,500,000
Sales		4,000,000	2,500,000	(180,000)	6,320,000
Cost of sales		3,100,000	1,700,000	(177,692)	4,622,308
Income tax expense		80,000	50,000	(923)	129,077

[Leah K.]

Hi Ruby:

 

I have the same balances as you except for RE: wasn't there an update saying that RE opening for Sat is $800,000?

 

Leah.

[Ruby]

Yes agreed but is that not for part b? since the $2,400,000 is the
ending RE?

> > On Sun, Jul 24, 2011 at 7:55 PM, Helene Lapierre <lenny.lapie...@gmail.com

> > > wrote:
>
> >> I am not getting the same answer as the folks on Blackboard... where is
> >> the 21,000 addition to Inventory coming from
> >> Helene
> >> Thanks
>
> >>      90% investment in Sat    Intercompany Sales and Purchases   A/R A/P
> >> 40,000  Intercompany Sales  Year 3  180,000     Intercompany Profit and
> >> Losses        before Tax @ After  Opening Inventory tax 40% Tax upstream
> >> sales        60,000/(1+.30)=C 46154 60,000-46154 13,846 5,538 8,308
> >>           Ending Inventory        upstream sales        70,000/(1+.30)=c
> >> 53,846 70,000-53846 16154 6,462 9,692   30,000 12,000 18,000

> >> *Account* *Details of Amounts* *Balance* ** ** Inventory 500,000 +300,000   Acc.

[Leah K.]

Oh, yes, right.

So, for part b - I just discussed how the calculation will be affected by intercompany transactions without working through the whole calculation of NCI-I/S and NCI/B/s - but not sure if I did the right thing

[Jeff & Renee Renaud]

21000 is an upstream inventory closing balance before taxes (70000*0.30)

Here is what I have.

 

Calculation 3 & 4
Item					Before Tax	Tax @40%	After Tax
Yr 2
↑	Opening inventory, realized profits (SAT selling)				45,000	18,000	27,000	a
↑	Closing inventory, unrealized profits (SAT selling)				18,000	7,200	10,800	b
Yr 3
↑	Opening inventory, realized profits (SAT selling)				18,000	7,200	10,800	b
↑	Closing inventory, unrealized profits (SAT selling)				21,000	8,400	12,600	c
↑	Sales				180,000	d
↑	Accounts Receivable & Payables				40,000	e
a	150000*0.3=45000*0.40=18000, 45000-18000=27000
b	60000*0.30=18000*0.40=7200, 18000-7200=10800
c	70000*0.30=21000*0.40=8400, 21000-8400=12600
d	180000
e	40000
f	4000000-3100000-80000-180000=640000
g	2500000-1700000-50000=750000
Inventory		500000+300000-21000			779,000
Accounts payable		600000+320000-40000			880,000
Retained earnings		2400000+800000			3,200,000
Sales		4000000+2500000-180000			6,320,000
Cost of Sales		3100000+1700000+21000-18000-180000			4,623,000
Income Tax expense		80000+50000+7200-8400			128,800
Calculation 6-CRE OB
PAT RE, OB							2,400,000
SAT RE, OB					1,100,000
Add	Realized profit OI Yr 2				27,000
	Realized profit OI Yr 3				10,800
Less	Unrealized profit CI Yr 3				-         12,600
					1,125,200
Pat Share					90%		1,012,680
Consolidated Retained Earnings Closing							3,412,680
NCI @10%							112,520

[Jeff & Renee Renaud]

There was an update on SAT’s RE to 800000.  I used it instead of 1100000 but I’m not sure that was right.  Can you explain how you did your adjustments?  Are they net of tax?

[lenny.l...@gmail.com]

Thanks a bunch
I will look at your question in the morning - I am off tomorrow

Sent from my BlackBerry® wireless device

---

From: "Jeff & Renee Renaud" <ren...@bmts.com>

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Date: Sun, 24 Jul 2011 21:37:12 -0400

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Subject: RE: Assign 2 question # 2