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 $ 10,888 Accounts receivable 250,000 100,eee Inventories 3, e82,888 520,000 Equipment (net) 6,150,000 2,500,eee Buildings (net) 2,680,000 500, eee Investment in stamp (at cost) 850,000 $12,900,000 $3,638,888 Liabilities and Shareholders' Equity Current liabilities $ 380,000 $ 170,888 Long-term liabilities 4, eee, 600 1,100,888 Common shares 3, eee,888 500,000 Retained earnings 5,600,000 1,860,000 $12,900,000 $3,638,888 STATEMENTS OF INCOME AND RETAINED EARNINGS Post Sales revenue $3,500,000 other revenues 300, eee 3,800, eee Cost of goods sold 1,700, eee selling and administrative expenses 308, eee other expenses 200, eee Income tax expense 300, eee $2,580, eee Net income 1,300, eee Retained earnings, beginning balance $4,500,000 5,800, eee Dividends declared 200, eee Retained earnings, ending balance $5,680, eee Stamp $ 9e0,000 30,000 930,000 330,000 180,000 150,000 70,000 $ 650,000 280,000 $ 1,600,000 18,800,000 20,000 $ 1,860,000 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 Refer to Question 2. What is the total adjustment to consolidated cost of goods sold for Intercompany sales for Year 5 and unrealized profits in ending Inventory at December 31, Year 5? The financial statements of Post Company and Stamp Company on December 31, Year 5. were as follows: BALANCE SHEETS Assets Cash Accounts receivable Inventories Equipment (net) Buildings (net) Investment in stamp (at cost) Post $ 50,888 250,000 3,000,000 6,150,000 2,600,000 850, 880 $12,980,000 Stamp $ 10,eee 100,000 520,880 2,500,000 500,000 $3,630,000 Liabilities and Shareholders' Equity Current liabilities Long-term liabilities Common shares Retained earnings $ 300,000 4, eee, 800 3, eee, e80 5,600,000 $12,980,000 $ 170,000 1,100,000 500,000 1,860,000 $3,630,888 STATEMENTS OF INCOME AND RETAINED EARNINGS Post Sales revenue $3,500, eee other revenues 300, eee 3,800, eee Cost of goods sold 1,700, eee selling and administrative expenses 300,eee other expenses 280, eee Income tax expense 300,eee $2,500, eee Net income 1,300, eee Retained earnings, beginning balance $4,508, eee 5,880, eee Dividends declared 200, eee Retained earnings, ending balance $5,680, eee Stamp $ gee, 200 30,000 930,000 330,000 180,000 150,000 70,000 $ 650,000 280,000 $ 1,600,000 18,800,000 20,000 $ 1,860,000 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. To calculate Post's consolidated Income tax expense, first add together the unadjusted totals from Post's and Stamp's separate-entity financial statements. What is the adjustment to this figure related to the unrealized profit In beginning Inventory for the year ended December 31. Year 5? 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 $ 10,888 Accounts receivable 250,000 100,eee Inventories 3, e82,888 520,000 Equipment (net) 6,150,000 2,500,eee Buildings (net) 2,680,000 500, eee Investment in stamp (at cost) 850,000 $12,900,000 $3,638,888 Liabilities and Shareholders' Equity Current liabilities $ 380,000 $ 170,888 Long-term liabilities 4, eee, 600 1,100,888 Common shares 3, eee,888 500,000 Retained earnings 5,600,000 1,860,000 $12,900,000 $3,638,888 STATEMENTS OF INCOME AND RETAINED EARNINGS Post Sales revenue $3,500,000 other revenues 300, eee 3,800, eee Cost of goods sold 1,700, eee selling and administrative expenses 308, eee other expenses 200, eee Income tax expense 300, eee $2,580, eee Net income 1,300, eee Retained earnings, beginning balance $4,500,000 5,800, eee Dividends declared 200, eee Retained earnings, ending balance $5,680, eee Stamp $ 9e0,000 30,000 930,000 330,000 180,000 150,000 70,000 $ 650,000 280,000 $ 1,600,000 18,800,000 20,000 $ 1,860,000 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 Refer to Question 2. What is the total adjustment to consolidated cost of goods sold for Intercompany sales for Year 5 and unrealized profits in ending Inventory at December 31, Year 5? The financial statements of Post Company and Stamp Company on December 31, Year 5. were as follows: BALANCE SHEETS Assets Cash Accounts receivable Inventories Equipment (net) Buildings (net) Investment in stamp (at cost) Post $ 50,888 250,000 3,000,000 6,150,000 2,600,000 850, 880 $12,980,000 Stamp $ 10,eee 100,000 520,880 2,500,000 500,000 $3,630,000 Liabilities and Shareholders' Equity Current liabilities Long-term liabilities Common shares Retained earnings $ 300,000 4, eee, 800 3, eee, e80 5,600,000 $12,980,000 $ 170,000 1,100,000 500,000 1,860,000 $3,630,888 STATEMENTS OF INCOME AND RETAINED EARNINGS Post Sales revenue $3,500, eee other revenues 300, eee 3,800, eee Cost of goods sold 1,700, eee selling and administrative expenses 300,eee other expenses 280, eee Income tax expense 300,eee $2,500, eee Net income 1,300, eee Retained earnings, beginning balance $4,508, eee 5,880, eee Dividends declared 200, eee Retained earnings, ending balance $5,680, eee Stamp $ gee, 200 30,000 930,000 330,000 180,000 150,000 70,000 $ 650,000 280,000 $ 1,600,000 18,800,000 20,000 $ 1,860,000 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. To calculate Post's consolidated Income tax expense, first add together the unadjusted totals from Post's and Stamp's separate-entity financial statements. What is the adjustment to this figure related to the unrealized profit In beginning Inventory for the year ended December 31. Year 5