at amount should be reported the year ended December 31, year 1? as gross profit in Bee and Cee's combined income statement for a. $26,000 b. $41,000 e. $47,800 d. $56,000 28. The following information pertains to shipments of merchandise from Home Office to Branch during year 1: Home Office's cost of merchandise Intracompany billing Sales by Branch Unsold merchandise at Branch on December 31, year 120,000 S160,000 200,000 250,000 In the combined income statement of Home Office and Branch for the year ended December 31, year 1, what amount of the above transactions should be included in sales? a. $250,000 b. $230,000 c. $200,000 d. $180,000 29. Scroll. Inc., a wholly owned subsidiary of Pim, Inc. began operations on January 1, Year 4 The following information is from the condensed Year 4 income statements: Pim $100,000 Sales to Scroll Sales to others 400.000 300.000 S500,000 300,000 80,000 S150,000 $30,000 Cost of goods sold: Acquired from Pim Acquired from others Gross proft Depreciation Other expenses Income from operations Gain on sale of equipment to Scroll Income before income taxes 350,000 190,000 40,00010,000 60.000 15.000 $50,000 $5,000 12000 $38,000 $5,000 Sales by Pim to Scroll are made on the same terms as those made to third parties. Equipment purchased by Scroll from Pim for $36,000 on January 1, Year 4,is depreciated using the straight-line method over 4 years. In Pim's December 31, Year 4, consolidating worksheet, how much intercompany profit should be eliminated from Scroll's inventory? a. $30,000 b. $20,000 c. $10,000 d. $6,000 30. Scroll. Inc, a wholly owned subsidiary of Pim, Inc. began o operations on January 1, Year 4. The following information is from the condensed Year 4 income statements: Seroll Pim $100,000 Sales to Scroll Sales to others 400,000 300,000 S500,000 300,000 Cost of goods sold: Acquired from Pim Acquired from others Gross profit Depreciation Other expenses Income from operations Gain on sale of equipment to Scroll Income before income taxes 80,000 350,000 190,000 $150,000 $30,000 40,000 10,000 60.000 15.000 S50,000 $5,000 12,000 $38,000 $5,000 Sales by Pim to Scroll are made on the same terms as those made to third parties. Equipment purchased by Scroll from Pim for536,000 on January , Year 4, is depreciated using the straight-line method over 4 years. The remaining estimated economic life by Scroll is consistent with the original estimate by Pim. What amount should be reported as depreciation expense in Pim's consolidated i income statement? a. $50,000 b. $47,000 C. $44,000 d. $41,000 31. Power Co. is a manufacturer and Slack Co., its 100%-owned subsidiary, is a retailer. The companies are vertically integrated. Thus, Slack purchases all of its inventory from Power. On January 1, Slack's inventory was $30,000. For the year ended December 31, its purchases were SI 50,000, and its cost of sales was S 166,500. Power's sales to Slack reflect a 50% markup on cost. Slack then resells the goods to outside entities ata 100% markup on cost. At what amount should the intercompany inventory purchase be reported in the consolidated balance sheet at December 31? a. $16,500 b. $9,000 c. $13,500 d. $6,750 32. Port Inc., owns 100% of Salem, Inc. On January 1, Port sold Salem delivery equipment at a gain. Port had owned the equipment for 2 years and used a 5-year straight-line depreciation rate with no residual value. Salem is using a 3-year straight-line depreciation rate with no residual value for the equipment. In the consolidated income statement, Salem's recorded depreciation expense on the equipment for the year will be decreased by a, 20% of the gain on sale. b, 331/3% of the gain on sale. C. 50% of the gain on sale. d, 100% of the gain on sale. 10
