P Company acquired 70% of the ordinary shares of S Company at a time when S Company’s book values and fair values were equal. Separate income of P and Sfor 2022 are as follows:                                                                 P                                S Sales                                            7,000,000               4,000,000 Cost of Sales                             4,000,000               2,000,000 Dividend Revenue                     490,000                     0 Net Income                                1,800,000              1,000,000 Intercompany sales from P to S for 2021 and 2022 are as follows:                             Cost Selling               Price                 Sold as of year-end 2021                   2,496,000               3,900,000                      40% 2022                   1,650,000               2,750,000                      50% For the year 2022, compute for  The consolidated Cost of Sales.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

P Company acquired 70% of the ordinary shares of S Company at a time when S
Company’s book values and fair values were equal. Separate income of P and Sfor 2022 are
as follows:

                                                                P                                S
Sales                                            7,000,000               4,000,000
Cost of Sales                             4,000,000               2,000,000
Dividend Revenue                     490,000                     0
Net Income                                1,800,000              1,000,000

Intercompany sales from P to S for 2021 and 2022 are as follows:

                            Cost Selling               Price                 Sold as of year-end
2021                   2,496,000               3,900,000                      40%
2022                   1,650,000               2,750,000                      50%


For the year 2022, compute for 
The consolidated Cost of Sales.

Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
S Corporations
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education