ABC Corporation acquired an 80% interest in XYZ Corporation on January 1, 2020, when the book values of XYZ's assets and liabilities were equal to their fair values. The cost of the 80% interest was equal to 80% of the book value of XYZ's net assets. During 2020, ABC old merchandise that cost $70,000 to XYZ for $86,000. On December 31, 2020, three-fourths of the merchandise acquired from ABC remained in XYZ's inventory. Separate incomes (investment income not included) of the two companies are as follows:

ABC XYZ Sales Revenue $180,000 $160,000 Cost of Goods Sold 120,000 90,000 Operating Expenses 17,000 21,000 Separate incomes $ 43,000 $ 49,000

The consolidated income statement for ABC Corporation and subsidiary for the year ended December 31, 2020 will show consolidated cost of sales of

a- $210,000.

b- $136,000.

c- $148,000.

d- $120,000.