Problem 2Pawn Company holds 70% of Sell Company stock.Pawn has sold inventory to Sell Company as follows:Year2019202020212022SalesPrice toCost toPawnSell$203,000$355,000$208,000 $312,000$360,000 $450,000$150,000 $250,000Percentof SoldInventoryHeld atYear end30%40%25%20%The following balances were included in the individualfinancial statements of each company for the year ended12/31/2022:SellSalesPawn$6,500,000 3,700,000$ 3,470,000 2,200,000$ 590,000 350,000Cost of goods soldMerch. inventorya. What will be reported as consolidated sales in the year 2022?b. What will be reported as consolidated inventory at 12/31/2022?c. What will be reported as consolidated cost of goods sold for 2022?d. Were the intra-entity sales of inventory items upstream ordownstream?

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Problem 2 Pawn Company holds 70% of Sell Company stock. Pawn has sold inventory to Sell Company as follows: Year 2019 2020 2021 2022 Sales Price to Cost to Pawn Sell $203,000 $355,000 $208,000 $312,000 $360,000 $450,000 $150,000 $250,000 Percent of Sold Inventory Held at Year end 30% 40% 25% 20% The following balances were included in the individual financial statements of each company for the year ended 12/31/2022: Pawn Sell Sales Cost of goods sold Merch. inventory $6,500,000 3,700,000 $ 3,470,000 2,200,000 $ 590,000 350,000 a. What will be reported as consolidated sales in the year 2022? b. What will be reported as consolidated inventory at 12/31/2022? c. What will be reported as consolidated cost of goods sold for 2022? d. Were the intra-entity sales of inventory items upstream or downstream?

Problem 2 Pawn Company holds 70% of Sell Company stock. Pawn has sold inventory to Sell Company as follows: Year 2019 2020 2021 2022 Sales Price to Cost to Pawn Sell $203,000 $355,000 $208,000 $312,000 $360,000 $450,000 $150,000 $250,000 Percent of Sold Inventory Held at Year end 30% 40% 25% 20% The following balances were included in the individual financial statements of each company for the year ended 12/31/2022: Pawn Sell Sales Cost of goods sold Merch. inventory $6,500,000 3,700,000 $ 3,470,000 2,200,000 $ 590,000 350,000 a. What will be reported as consolidated sales in the year 2022? b. What will be reported as consolidated inventory at 12/31/2022? c. What will be reported as consolidated cost of goods sold for 2022? d. Were the intra-entity sales of inventory items upstream or downstream?

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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Question

Problem 2
Pawn Company holds 70% of Sell Company stock.
Pawn has sold inventory to Sell Company as follows:
Year
2019
2020
2021
2022
Sales
Price to
Cost to
Pawn
Sell
$203,000
$355,000
$208,000 $312,000
$360,000 $450,000
$150,000 $250,000
Percent
of Sold
Inventory
Held at
Year end
30%
40%
25%
20%
The following balances were included in the individual
financial statements of each company for the year ended
12/31/2022:
Sell
Sales
Pawn
$6,500,000 3,700,000
$ 3,470,000 2,200,000
$ 590,000 350,000
Cost of goods sold
Merch. inventory
a. What will be reported as consolidated sales in the year 2022?
b. What will be reported as consolidated inventory at 12/31/2022?
c. What will be reported as consolidated cost of goods sold for 2022?
d. Were the intra-entity sales of inventory items upstream or
downstream?

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