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Pie Bakery owns 60 percent of Slice Products Company's stock. During 20x8, Slice produced 100,000 bags of flour, which it sold to Pie Bakery for $900,000. On December 31, 20X8, Pie had 20,000 bags of flour purchased from Slice Products on hand. Slice prices its sales at cost plus 50 percent of cost for profit. Ple, which purchased all its flour from Slice in 20X8, had no inventory on hand on January 1, 20X8. Pie Bakery reported income from its baking operations of $400,000, and Slice Products reported net income of $150,000 for 20x8. Required: a. Compute the amount reported as cost of goods sold in the 20X8 consolidated income statement. (Do not round intermediate calculations.) Consolidated cost of goods sold b. Prepare the worksheet consolidation entry or entries required to remove the effects of the intercompany sale in preparing consolidated statements at the end of 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)

Pie Bakery owns 60 percent of Slice Products Company's stock. During 20x8, Slice produced 100,000 bags of flour, which it sold to Pie Bakery for $900,000. On December 31, 20X8, Pie had 20,000 bags of flour purchased from Slice Products on hand. Slice prices its sales at cost plus 50 percent of cost for profit. Ple, which purchased all its flour from Slice in 20X8, had no inventory on hand on January 1, 20X8. Pie Bakery reported income from its baking operations of $400,000, and Slice Products reported net income of $150,000 for 20x8. Required: a. Compute the amount reported as cost of goods sold in the 20X8 consolidated income statement. (Do not round intermediate calculations.) Consolidated cost of goods sold b. Prepare the worksheet consolidation entry or entries required to remove the effects of the intercompany sale in preparing consolidated statements at the end of 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)

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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Pie Bakery owns 60 percent of Slice Products Company's stock. During 20x8, Slice produced 100,000 bags of flour, which it sold to Pie Bakery for $900,000. On December 31, 20X8, Pie had 20,000 bags of flour purchased from Slice Products on hand. Slice prices its sales at cost plus 50 percent of cost for profit. Pie, which purchased all its flour from Slice in 20X8, had no inventory on hand on January 1, 20X8. Pie Bakery reported income from its baking operations of $400,000, and Slice Products reported net income of $150,000 for 20x8. Required: a. Compute the amount reported as cost of goods sold in the 20x8 consolidated income statement. (Do not round intermediate calculations.) Consolidated cost of goods sold b. Prepare the worksheet consolidation entry or entries required to remove the effects of the intercompany sale in preparing consolidated statements at the end of 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)
Transcribed Image Text:Pie Bakery owns 60 percent of Slice Products Company's stock. During 20x8, Slice produced 100,000 bags of flour, which it sold to Pie Bakery for $900,000. On December 31, 20X8, Pie had 20,000 bags of flour purchased from Slice Products on hand. Slice prices its sales at cost plus 50 percent of cost for profit. Pie, which purchased all its flour from Slice in 20X8, had no inventory on hand on January 1, 20X8. Pie Bakery reported income from its baking operations of $400,000, and Slice Products reported net income of $150,000 for 20x8. Required: a. Compute the amount reported as cost of goods sold in the 20x8 consolidated income statement. (Do not round intermediate calculations.) Consolidated cost of goods sold b. Prepare the worksheet consolidation entry or entries required to remove the effects of the intercompany sale in preparing consolidated statements at the end of 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)
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