P Company Owns an 80% Interest in S Company

question 2

Multiple Choice

P Company owns an 80% interest in S Company.During 2017,S sells merchandise to P for $200,000 at a profit of $40,000.On December 31,2017,50% of this merchandise is included in P's inventory.Income statements for P and S are summarized below: Noncontrolling interest in income for 2017 is:

• A)$4,000.
• B)$19,200.
• C)$20,000.
• D)$24,000.

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Definitions:

Production Budget

A financial plan that outlines the cost of producing the goods or services a company plans to sell, including direct labor, materials, and overhead.

Denim Material

A durable, woven fabric commonly used for making jeans and other clothing items, characterized by its indigo blue color.

Budgeted Production

The planned amount of goods to be produced over a certain period, often based on demand forecasts.

Estimated Inventory

Estimated inventory represents a company's approximation or forecast of the inventory it has, which can be used for planning, budgeting, or as part of the inventory valuation process.