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K Company owns 100% of E Company. During the year, Kiana purchased inventory from Elyssa at a mark-up of 20% based on cost. How should the group compute for consolidated cost of sales? a. Cost of Sales of K + Cost of Sales of E– intercompany sales + Realized profit in beginning inventory – Unrealized profit in ending inventory. b. Cost of Sales of K + Cost of Sales of E – intercompany sales – Realized profit in beginning inventory + Unrealized profit in ending inventory. c. Cost of Sales of Kiana + Cost of Sales of Elyssa – Intercompany sales d. Cost of Sales of K + Cost of Sales of E

K Company owns 100% of E Company. During the year, Kiana purchased inventory from Elyssa at a mark-up of 20% based on cost. How should the group compute for consolidated cost of sales? a. Cost of Sales of K + Cost of Sales of E– intercompany sales + Realized profit in beginning inventory – Unrealized profit in ending inventory. b. Cost of Sales of K + Cost of Sales of E – intercompany sales – Realized profit in beginning inventory + Unrealized profit in ending inventory. c. Cost of Sales of Kiana + Cost of Sales of Elyssa – Intercompany sales d. Cost of Sales of K + Cost of Sales of E

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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K Company owns 100% of E Company. During the year, Kiana
purchased inventory from Elyssa at a mark-up of 20% based on cost.
How should the group compute for consolidated cost of sales?

a. Cost of Sales of K + Cost of Sales of E– intercompany sales + Realized profit in beginning inventory – Unrealized profit in ending inventory.
b. Cost of Sales of K + Cost of Sales of E – intercompany sales – Realized profit in beginning inventory + Unrealized profit in ending inventory.
c. Cost of Sales of Kiana + Cost of Sales of Elyssa – Intercompany sales
d. Cost of Sales of K + Cost of Sales of E

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