Assume that a parent company owns a 100% controlling interest in its long-held subsidiary. The following excerpts are from the parent's and subsidiary's pre-consolidation income statements for the year ending December 31, 2013:

	Parent	Subsidiary
Revenues	$1,312,500	$906,250
Cost of goods sold	(787,500)	(500,000)
Gross profit	$525,000	$406,250

On January 1, 2013, the subsidiary held no inventories purchased from the parent. During the year ending December 31, 2013, the parent company sold $450,000 of inventory to its subsidiary. All of the parent's sales to affiliates and non-affiliates have the same gross margin. At December 31, 2013, the subsidiary still held in its inventory $135,000 of merchandise purchased from the parent. The remaining inventory was sold to unaffiliated third-party customers during the year ended December 31, 2013.

1. What amount of revenues will be reported in the consolidated financial statements for the year ended December 31, 2013?

A. $1,312,500

B. $2,083,750

C. $1,768,750

D. $2,218,750

2. What amount of gross profit will be reported in the consolidated financial statements for the year ended December 31, 2013?

A. $887,250

B. $877,250

C. $921,250

D. $931,250