On January 1, 2017, Abbey acquires 90 percent of Benjamin’s outstanding shares. Financial information for these

two companies for the years of 2017 and 2018 follows:

  2017  2018 Abbey Company:      Sales$(684,000)$(1,004,000)Operating expenses 462,000  516,000 Intra-entity gross profits in ending inventory (included in above figures) (213,000) (247,000)Dividend income—Benjamin Company (13,500) (31,500)Benjamin Company:      Sales (307,000) (361,000)Operating expenses 162,000  209,000 Dividends paid (15,000) (35,000)

Assume that a tax rate of 40 percent is applicable to both companies.

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