Question
A B D E F G H L M N P Q R 1 On January 1st 2010 Froto Company acquired all of the
A B D E F G H L M N P Q R 1 On January 1st 2010 Froto Company acquired all of the voting stock of Bilbo at book value 2 Froto uses the initial value (cost) method to account for its investment in Bilbo and Bilbo does not pay any dividends 3 4 On November 2nd 2021 Froto sold merchandise to Bilbo for $800,000. Froto had purchased the merchandise for $500,000 5 On December 31st 2021 Bilbo had not sold any of this merchandise and Bilbo still had not paid its account payable to Froto 6 7 In 2022 Bilbo sold $600,000 of the merchandise acquired from Froto selling the merchandise for $900,000 8 During 2022 Bilbo paid off its account payable to Froto. 9 10 In 2023 Bilbo sold off the other $200,00 of the merchandise acquired from Froto for $235,000. 11 12 Bilbo and Froto reported the following (unconsolidated) for 2021, 2022 and 2023 13 14 15 2021 sales Froto Bilbo 5,000,000 1,000,000 16 cost of good sold 3,000,000 600,000 17 net income 1,000,000 18 19 inventory 400000 100,000 1,000,000 20 21 2022 Froto 22 sales 5,200,000 23 cost of goods sold 3,100,000 24 net income 1,030,000 25 26 27 inventory 400000 Bilbo 1,100,000 625,000 111,000 1,025,000 28 2023 Froto Bilbo 29 sales 5,400,000 1,200,000 30 cost of goods sold 3,200,000 666,000 31 net income 1,050,000 123,000 32 33 34 inventory 400000 900,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started