X-Beams Inc.owned 70% of the voting common stock of Kent Corp.During 2009,Kent made several sales of inventory to X-Beams.The total selling price was $180,000 and the cost was $100,000.At the end of the year,20% of the goods were still in X-Beams' inventory.Kent's reported net income was $300,000.What was the noncontrolling interest in Kent's net income?

Question

Quizplus · Accepted Answer

First, we need to calculate the portion of the sales made by Kent that are attributable to the non-controlling interest. Since X-Beams owns 70% of Kent's voting common stock, the non-controlling interest is 30%. Therefore, 30% of the sales made by Kent to X-Beams is attributable to the non-controlling interest:

Sales to X-Beams = $180,000
Cost of sales = $100,000
Gross profit = $80,000

Portion of gross profit attributable to non-controlling interest = 30% x $80,000 = $24,000

Next, we need to adjust Kent's reported net income for the portion of the gross profit that is attributable to the non-controlling interest:

Kent's reported net income = $300,000
Adjustment for non-controlling interest in gross profit = -$24,000
Non-controlling interest in Kent's net income = $276,000 x 30% = $85,200

Therefore, the answer is B) $85,200.