Top Company holds 90 percent of Bottom Company’s common stock. In the current year, Top reports sales of $800,000 and cost of goods sold of $600,000. For this same period, Bottom has sales of $300,000 and cost of goods sold of $180,000. During the current year, Top sold merchandise to Bottom for $100,000. The subsidiary still possesses 40 percent of this inventory at the current year-end. Top had established the transfer price based on its normal gross profit rate. Assume that the transfers were from Bottom Company to Top Company. What are the consolidated sales and cost of goods sold?a. $1,000,000 and $720,000b. $1,000,000 and $755,000c. $1,000,000 and $696,000d. $970,000 and $712,000
Top Company holds 90 percent of Bottom Company’s common stock. In the current year, Top reports sales of $800,000 and cost of goods sold of $600,000. For this same period, Bottom has sales of $300,000 and cost of goods sold of $180,000. During the current year, Top sold merchandise
to Bottom for $100,000. The subsidiary still possesses 40 percent of this inventory at the current year-end. Top had established the transfer price based on its normal gross profit rate. Assume that the transfers were from Bottom Company to Top Company. What are the consolidated sales and cost of goods sold?
a. $1,000,000 and $720,000
b. $1,000,000 and $755,000
c. $1,000,000 and $696,000
d. $970,000 and $712,000
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