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please it's urgent, answer correctly please! Accounting The financial statements of Post Company and Stamp Company on December 31, Year 5, were as follows: BALANCE
please it's urgent, answer correctly please!
Accounting The financial statements of Post Company and Stamp Company on December 31, Year 5, were as follows: BALANCE SHEETS Assets Post Stamp Cash $ 50,000 $10,000 Accounts 250,000 100,000 receivable Inventories 3,000,000 520,000 Equipment (net) 6,150,000 2,500,000 Buildings (net) 2,600,000 500,000 Investment in 850,000 Stamp (at cost) $ 12,900,000 $3,630,000 Liabilities and Shareholders' Equity Current liabilities $ 300,000 $170,000 Long-term liabilities 4,000,000 1,100,000 Common shares 3,000,000 500,000 Retained earnings 5,600,000 1,860,000 $ 12,900,000 $3,630,000 STATEMENTS OF INCOME AND RETAINED EARNINGS Post Stamp Sales revenue $ 3,500,000 $900,000 Other revenues 300,000 30,000 3,800,000 930,000 Cost of goods sold 1,700,000 330,000 Selling and 300,000 100,000 administrative expenses Other expenses 200,000 150,000 Income tax 300,000 70,000 expense $ 2,500,000 $650,000 Net income 1,300,000 280,000 Retained earnings, $ 4,500,000 $1,600,000 beginning balance 5,800,000 18,800,000 Dividends declared 200,000 20,000 Retained earnings, $ 5,600,000 $1,860,000 ending balance Additional Information Post owns 70 percent of Stamp and carries its investment in Stamp on its books by the cost method. During Year 4, Post sold Stamp $100,000 worth of merchandise, of which $60,000 was resold by Stamp in the year. During Year 5, Post had sales of $200,000 to Stamp, of which 40 percent was resold by Stamp. Intercompany sales are priced to provide Post with a gross profit of 30 percent of the sales price. On December 31, Year 4, Post had in its inventories $150,000 of merchandise purchased from Stamp during Year 4. On December 31, Year 5, Post had in its ending inventories $100,000 of merchandise that had resulted from purchases of $350,000 from Stamp during Year 5. Intercompany sales are priced to provide Stamp with a gross profit of 60 percent of the sale price. Both companies are taxed at 25 percent. What amount of sales revenue would appear on Post's consolidated income statement for the year ended December 31, Year 5? Multiple Choice $3,850,000 $4,050,000 $4,200,000 $4,400,000Step by Step Solution
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