Parent Corporation owns 90 percent of Subsidiary 1 Company\'s stock and 75 perce
ID: 2500074 • Letter: P
Question
Parent Corporation owns 90 percent of Subsidiary 1 Company's stock and 75 percent of Subsidiary 2 Company's stock. During 2008, Parent sold inventory purchased in 2007 for $48,000 to Subsidiary 1 for $60,000. Subsidiary 1 then sold the inventory at its cost of $60,000 to Subsidiary 2. Prior to December 31, 2008, Subsidiary 2 sold $45,000 of inventory to a nonaffiliate for $67,000 and held $15,000 in inventory at December 31, 2008.
Based on the information given above, what amount should be reported in the 2008 consolidated income statement as cost of goods sold?
A. $36,000
B. $12,000
C. $48,000
D. $45,000
Based on the information given above, what amount should be reported in the December 31, 2008, consolidated balance sheet as inventory?
A. $36,000
B. $12,000
C. $15,000
D. $28,000
Based on the information given above, what amount of cost of goods sold must be eliminated from the consolidated income statement for 2008?
A. $117,000
B. $120,000
C. $150,000
D. $128,000
Based on the information given above, what amount of sales must be eliminated from the consolidated income statement for 2008?
A. $117,000
B. $120,000
C. $150,000
D. $128,000
AACSB: Analytic
AICPA: Measurement
18. Based on the information given above, what amount of inventory must be eliminated from the consolidated balance sheet for 2008?
A. $2,400
B. $9,000
C. $12,000
D. $3,000
Explanation / Answer
14) $36,000
% in sales = ( $60,000- $45,000)/ 60,000 = 20%
hence(45,000@80% = $36,000)
15)$12,000 (15,000 @80% = $12,000)
16) $117,000 ( $48,000 + $60,000 +45,000 - $36,000)
17) $120,000 (60,000 +60,000)
18) $3000 ( $15,000 - $12,000)
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