Question
Peanut Butter Company routinely receives goods from its 80%-owned subsidiary, Sinnamon Corporation. In 20X4, Sinnamon sold merchandise that cost $70,000 to Peanut Butter for $90,000.
Peanut Butter Company routinely receives goods from its 80%-owned subsidiary, Sinnamon Corporation. In 20X4, Sinnamon sold merchandise that cost $70,000 to Peanut Butter for $90,000. Half of this merchandise remained in Peanut Butter's December 31, 20X4 inventory. This inventory was sold in 20X5. During 20X5, Sinnamon sold merchandise that cost $150,000 to Peanut Butter for $210,000. One-third of the 20X5 merchandise inventory remained in Peanut Butter's December 31, 20X5 inventory.
Selected income statement information for the two affiliates for the year 20X5 was as follows:
Peanut Butter Sinnamon
Sales Revenue $500,000 $400,000
Cost of Goods Sold 350,000 260,000
Other Expenses 50,000 70,000
Consolidated cost of goods sold for Peanut Butter and Sinnamon for 20X5 was:
Select one:
a.
$410,000
b.
$390,000
c.
$380,000
d.
$420,000
e.
$610,000
Separate Net Incomes $100,000 $70,000
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