Pate Corp. owns 80% of Strange Inc.€™s common stock. During 2014, Pate sold inventory to Strange for $600,000 on the same terms as sales made to outside customers. Strange sold the entire inventory purchased from Pate by the end of 2014. Pate and Strange report the following for 2014.

Required:
1. What amount should Pate report as sales revenue in its 2014 consolidated income statement?
2. What amount should Pate report as cost of sales in its 2014 consolidated incomestatement?

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Pate Strange $1,600,000 $ 700,000 Sales Cost of sales $2,700,000 1,800,000 $900,000 900,000 Gross profit