Question

g Pluto Company owns 80 percent of the common stock of Star Corporation. During the year, Pluto reported sales of $1,000,000, and Star reported sales of $500,000, including sales to Pluto of $80,000. The amount of sales that should be reported in the consolidated income statement for the year is:

Answer 1

The answer is $1,420,000

Step-by-step explanation:

Consolidated income statement is the combination of both Pluto and Star individual income statement.

Pluto sales for the year is $1,000,000

Star reported sales $500,000

Sales from star to Pluto $80,000

The amount of sales that will be reported in the consolidated income statement for the year is therefore,

$1,000,000 + $500,000 - $80,000

=$1,420,000