Ensley Company and Bac Company have separate incomes of $140,000 and $240,000,respectively.They had intercompany purchases and sales of $40,000 and intercompany interest of $2,000.Consolidated net income is

Question

Quizplus · Accepted Answer

To obtain the consolidated net income, we first need to eliminate the intercompany transactions (sales and interest) because they do not represent revenues or expenses for the group as a whole. 
Eliminating the intercompany sales and interest, we get:

- Ensley Company income: $140,000
- Bac Company income: $240,000
- Total group income: $140,000 + $240,000 = $380,000

Therefore, the consolidated net income is $380,000. The other answer choices do not consider the elimination of intercompany transactions or do not add up the two separate incomes correctly.

Ensley Company and Bac Company Have Separate Incomes of $140,000