Question
Pristine Corporation owns 80% of Serendipity Inc.s common stock. During 2008, Pristine sold Serendipity $250,000 of inventory on the same terms as sales made to
Pristine Corporation owns 80% of Serendipity Inc.s common stock. During 2008, Pristine sold Serendipity $250,000 of inventory on the same terms as sales made to third parties. Serendipity sold all the inventory purchased from Pristine in 2008. The following data pertain to sales by each company for the year:
| Pristine | Serendipity | |
| Sales | $1,000,000 | $700,000 |
| Cost of goods sold | 400,000 | 350,000 |
How much should be reported as cost of goods sold in the consolidated income statement for 2008?
| A. $750,000 |
| B. $680,000 |
| C. $400,000 |
| D. $500,000 |
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Survey of Accounting
Authors: Thomas P. Edmonds, Frances M. McNair, Philip R. Olds, Bor Yi
3rd Edition
978-1259683794, 77490835, 1259683796, 9780077490836, 978-0078110856
