Total revenue will increase if price

Select one:

Decreases

Decreases over the elastic portion of the demand curve

Increases or decreases over any portion of the demand curve

Increases over the elastic portion of the demand curve

Note that I use the convention positive numbers are debits and negative numbers, shown in parentheses, are credits. You should use that same convention in making adjustments. On a new worksheet, you will consolidate Parent and Subsidiary. Set up a consolidation worksheet with parent, subsidiary and columns for adjustments, and consolidated amounts. At the bottom of your worksheet is an amount of Intercompany Sales, from Subsidiary to Parent. Those sales were made to generate a gross profit at the percentage indicated with the intercompany sales amount. Just to be clear, the Intercompany Sales amount is at the selling price from Subsidiary to Parent. Of the intercompany sales, one-half of the sales remain in Parent Company's inventory (part of Current Assets). Round if you must, do everything in whole dollars. Make appropriate adjustments for the inventory. Parent Company charges a "management fee" to Subsidiary Company (related to services that Parent Company performs for Subsidiary). The fee is 1.5% of Subsidiary's sales. Subsidiary records the expense in "Administrative expense." Parent Company records the income in "Other Expense" (since it's income, it reduces the "Other expense" amount). 3 4 SUBSIDIARY COMPANY 5 Statement of Financial Position 6 Current assets 7 PP&E 8 Accumulated depreciation 9 Goodwill 928,140 6,789,465 (116,250) 4,285,208 10 Patents and other noncur. 757,950 11 Investment in SubCo 12 Total assets 12,644,513 13 14 Current liabilities 15 Noncurrent liabilities 16 Common stock 17 Retained earnings 18 Total liabilities and equity (205,763) (2,348,250) (9,765,000) (325,500) (12,644,513) 19 20 21 Statement of Income 22 Sales 23 Cost of goods sold 24 Administrative expense 25 Technology expense 26 Marketing expense 27 Equity income SubCo 28 Other expense 29 Income tax expense 30 31 Net Income 32 (11,625,000) 5,766,000 697,500 2,790,000 1,023,000 930,000 93,000 (325,500) 34 PARENT COMPANY 35 Statement of Financial Position 36 Current assets 2,345,300 37 PP&E 38 Accumulated depreciation 39 Goodwill 17,156,175 (7,293,750) 10,828,213 40 Patents and other noncur. 8,915,250 41 Investment in SubCo 42 Total assets 10,090,500 42,041,688 43 44 Current liabilities 45 Noncurrent liabilities (519,938) (5,933,750) (24,675,000) (10,913,000) (42,041,688) 46 Common stock 47 Retained earnings 48 Total liabilities and equity 49 50 51 Statement of Income 52 Sales 53 Cost of goods sold 54 Administrative expense 55 Technology expense 56 Marketing expense 57 Equity income SubCo 58 Other expense 59 Income tax expense (29,049,500) 14,570,000 1,762,500 7,050,000 2,585,000 (325,500) 2,350,000 235,000 60 61 Net Income (822,500) 62 63 64 Sub gross profit (interco sales) 65 Intercompany Sales 60% 581,250 66