Question
PART ONE: Ariel owns 70% of Sabastian. During 2019, Sabastian sold 1000 units of inventory to Ariel for $70 each. The units cost $50 to
PART ONE: Ariel owns 70% of Sabastian. During 2019, Sabastian sold 1000 units of inventory to Ariel for $70 each. The units cost $50 to produce. A 12/31/2019 inventory count should indicate that 300 units remained in Ariels inventory. S reported a $50,000 net income in 2019. Ariel should recognize income in 2019 for which of the following amounts?
Investment in Sabastian $35,000
...investment income. $35,000
Investment in Sabastian $30,800
...Investment Income $30,800
21,000
None of the above
PART TWO: This problem is based on information in the previous problem. Ariel owns 70% of Sabastian. During 2019, Sabastian sold 1000, units of Inventory to Ariel for $70 each. The units cost $50 to produce. A 12/31/2019 inventory count indicated the 300 units remained in Ariels inventory. Sabastian reported a $50,000 net income in 2019 and $70,000 in 2020. Which of the following worksheet entries should Ariel make to consolidate trial balances on 12/31/2019 in response to the internal sale?
Sales. $21,000
...COGS. $15,000
...Inventory. $6,000
Sales. $70,000
...COGS 50,000
...Inventory $20,000
Inventory 20,000
COGS 50,000
...Sales 70,000
PART THREE: This problem is based on information in the preceding problem. Ariel owns 70% of Sabastian. During 2019, Sabastian sold 1000 units of Inventory to Ariel for $70 each. The units cost $50 to produce. A 12/31/2019 inventory count indicates that 300 units remained in Ariel's inventory. Sabastian reported a $50,000 net income in 2019 and a $70,000 net income in 2020. No internal sales were made in 2020. Ariel should recognize investment income in 2020 for which of the following amounts?
Investment in Sabastian $44,800
...Investment Income $44,800
Investment in Sabastian $49,000
...Investment Income $49,000
Investment in Sabastian $53,200
...Investment Income $53,200
Investment in Sabastian $63,000
...Investment Income $63,000
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