Plush Corporation holds 80 percent of Scratch Company's voting common shares, acquired at book values, but none of its preferred shares. At the date of acquisition, the fair value of the noncontrolling interest was equal to 20 percent of the book value of Scratch Company. Summary balance sheets for the companies on December 31, 20X8, are as follows: PlushCorporationScratchCompanyCash and Receivables $75,000 $60,000 Inventory 40,000 30,000 Buildings and Equipment (net) 160,000 110,000 Investment in Scratch Company 80,000 0 Total Assets $355,000 $200,000 Accounts Payable 50,000 $25,000 Preferred Stock 50,000 75,000 Common Stock ($5 par value) 100,000 50,000 Retained

Question

Earnings  155,000    50,000  Total Liabilities and Owners' Equity $355,000   $200,000  Neither of the preferred issues is convertible. Plush's preferred pays a 8 percent annual dividend, and Scratch's preferred pays a 12 percent dividend. Scratch reported net income of $30,000 and paid a total of $10,000 of dividends in 20X8. Plush reported income from its separate operations of $70,000 and paid total dividends of $25,000 in 20X8.Based on the preceding information, what is the amount of earnings available to common shareholders reported in the consolidated financial statements for the year?

A. $82,800
B. $91,000
C. $87,000
D. $89,200

Answer 1

Answer: A