Bates Ltd. owns 60% of the outstanding common shares of Sam Ltd. During 20X6, sales from Sam to Bates were $200,000. Merchandise was priced to provide Sam with a gross margin of 20%. Bates's inventories contained $40,000 at December 31, 20X5, and $15,000 at December 31, 20X6, of merchandise purchased from Sam. Cost of goods sold for Bates and Sam for 20X6 on their separate-entity income statements were as follows:

Bates Sam

Beginning inventory $ 100,000 $ 50,000

Purchases 700,000 200,000

Ending inventory (110,000) (55,000)

Cost of goods sold $ 690,000 $ 195,000

What is the balance of the consolidated inventory account at December 31, 20X6?

A) $160,000

B) $162,000

C) $165,000

D) $168,000

What is cost of sales on the consolidated statement of income for 20X6?

A) $687,000

B) $680,000

C) $685,600

D) $660,000