Fundamentals of Advanced Accounting
6th Edition
ISBN: 9780077862237
Author: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Publisher: McGraw-Hill Education
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Chapter 5, Problem 5P
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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
TT Company holds 90 percent of BB Company’s common stock. In the current year, TT reports sales of P800,000 and cost of goods sold of P600,000. For this same period, BB has sales of P300,000 and cost of goods sold of P180,000. During the current year, TT sold merchandise to BB for P100,000. The subsidiary still possesses 40 percent of this inventory at the current year-end. TT had established the transfer price based on its normal markup. What are the cost of goods sold?
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. Required: Make the necessary elimination entries Compute consolidated sales and cost of goods sold Bellgrade, Inc., acquired a 60 percent interest in Hansen Company several years ago. During 2011, Hansen sold inventory costing $75,000 to Bellgrade for $100,000. A total of 16 percent of this inventory was not sold to outsiders until 2012. During 2012, Hansen sold inventory costing $96,000 to Bellgrade for $120,000. A total of 35 percent of this inventory was not sold to outsiders until 2013. In 2012, Bellgrade reported cost of goods sold of $380,000 while Hansen reported $210,000.…
Chapter 5 Solutions
Fundamentals of Advanced Accounting
Ch. 5 - Prob. 1QCh. 5 - Prob. 2QCh. 5 - Prob. 3QCh. 5 - Prob. 4QCh. 5 - James, Inc., sells inventory to Matthews Company,...Ch. 5 - Prob. 6QCh. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Prob. 9QCh. 5 - Prob. 10Q
Ch. 5 - Prob. 11QCh. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Use the same information as in problem (5) except...Ch. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - Prob. 10PCh. 5 - What is the total of consolidated cost of goods...Ch. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - What is the consolidated total for inventory at...Ch. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Prob. 20PCh. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 1DYSCh. 5 - Prob. 2DYS
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- KK Co. holds 90% of the common stock of LL Co. During 20x2, KK reported sales of P1,120,000 and cost of goods sold of P840,000. For this same period, LL had sales of P420,000 and cost of goods sold of P252,000. Also during 20x2, KK sold merchandise to LL for P140,000. The subsidiary still possesses 40% of this inventory at the end of 20x2. KK had established the transfer price based on its normal markup. What are consolidated sales?arrow_forwardGoddy Company owns 80% of the common stock of Morris, Inc. In the current year, Goddy reports sales of $10,000,000 and cost of goods sold of $7,500,000. For the same period, Morris has sales of $200,000 and cost of goods sold of $160,000. During the year, Goddy sold merchandise to Morris for $60,000 at a price based on the normal markup. At the end of the year, Morris still possesses 30 percent of this inventory. Compute consolidated cost of goods so ld. Select one: a. $7,604,500. b. $7,500,000. c. $7,660,000. d. $7,615,000. e. $7,600,000.arrow_forwardIn Problem 5-5 if the numbers where changed to this. Top Company holds 90 percent of Bottom Company’s common stock. In the current year, Top reports sales of $820,000 and cost of goods sold of $615,000. For this same period, Bottom has sales of $320,000 and cost of goods sold of $192,000. During the current year, Top sold merchandise to Bottom for $120,000. 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. What are the consolidated sales and cost of goods sold?arrow_forward
- Weisman Company, a 100% owned subsidiary of Martindale Corporation, sells inventory to Martindale at a 20% profit on selling price. The following data are available pertaining to inter-company purchases by Martindale: 4. 5. a. b. Weisman's profit numbers were $125,000, $142,000 and $265,000 for 2020, 2021, and 2022, respectively. Martindale received dividends from Weisman of $25,000 for 2020 and 2021, and $30,000 for 2022. C. d. 3. Assume Weisman uses the equity method to account for its investment in Martindale. What is the balance in the pre-consolidation Income (loss) from subsidiary account for 2021? $136,000 a. b. Inter-company sales $18,000 $19,400 $21,500 C. d. 2020: 2021: 2022: a. b. C. d. $140,800 $141,600 $142,800 Assume Weisman uses the equity method to account for its investment in Martindale. What is the balance in pre-consolidation Income (loss) from subsidiary for 2022? Unsold at year end (based on selling price) 2020: 2021: 2022: $235,000 $264,600 $265,400 $268,600…arrow_forwardSun Corporation, a 75 percent–owned subsidiary of Pam Corporation, sells inventory items to its parent at 125 percent of cost. Inventories of the two affiliates for 2016 are as follows: Pam Sun Beginning inventory $400,000 $250,000 Ending inventory 500,000 200,000 Pam’s beginning and ending inventories include merchandise acquired from Sun of $150,000 and $200,000, respectively, which is sold in the following year. If Sun reports net income of $300,000 for 2016, Pam’s income from Sun will be: $255,000 $217,500 $215,000 $195,000arrow_forwardParent Company owns 90% of Subsidiary Company. For the current year, Parent and Subsidiary each report sales of P1,000,000 and P900,000 each, respectively. Also in the current year, Subsidiary sold goods to Parent P200,000. 40% of the goods purchased by the Subsidiary still remain unsold by the end of the year. Parent and Subsidiary have gross profit rates of 20% and 10% respectively and also report ending inventory of P85,000 and P90,000, each respectively. 1. Determine consolidated sales 2. Determine consolidated consolidated cost of sales 3. Determine consolidated inventory at year-end.arrow_forward
- Parent Company owns 90% of Subsidiary Company. For the current year, Parent and Subsidiary each report sales of P1,000,000 and P900,000 each, respectively. Also in the current year, Subsidiary sold goods to Parent P200,000. 40% of the goods purchased by the Subsidiary still remain unsold by the end of the year. Parent and Subsidiary have gross profit rates of 20% and 10% respectively and also report ending inventory of P85,000 and P90,000, each respectively. Required: Determine the consolidated inventory at year-end, consolidated cost of sales. and consolidated salesarrow_forwardNasty is a wholly owned subsidiary of Ugly. Inventories in their individual statements of financial position at the year end are shown as: Ugly $40,000 Nasty $20,000 Sales by Ugly to Nasty during the year were invoiced at $15,000 which included a profit by Ugly of 25% on cost. Two thirds of these goods were included in inventories at the year end. At what value should inventories appear in the consolidated statement of financial position?arrow_forwardHide Corporation is a wholly owned subsidiary of Seek Company. During 2015, Hide sold all of its production to Seek Company for $400,000, a price that includes a 25% gross profit. 2015 was the first year that such intercompany sales were made. By year-end, Seek sold, for $416,000, 80% of the goods it had purchased. The balance of the intercompany goods, $80,000, remained in the ending inventory and was adjusted to a lower fair value of $70,000. The adjustment was a charge to the cost of goods sold.1. Determine the gross profit on sales recorded by both companies.2. Determine the gross profit to be shown on the consolidated income statement.arrow_forward
- Padlock Corp. owns 90 percent of Safeco, Inc. During the year, Padlock sold 3,000 locking mechanisms to Safeco for $900,000. By the end of the year, Safeco had sold all but 500 of the locking mechanisms to outside parties. Padlock marks up the cost of its locking mechanisms by 60 percent in computing its sales price to affiliated and nonaffiliated customers. How much intra-entity profit remains in Safeco’s inventory at year-end?arrow_forwardGG Co. had the following transactions with two subsidiaries, OO and RR during 2020: Sales of P105,000 to OO, Inc., with P31,500 gross profit, OO had P26,250 of this inventory on hand at year end. Purchases of raw materials totaling P420,000 from RR Corp., a wholly owned subsidiary. RR’s gross profit on the sale was P84,000. GG had P98,000 of this inventory remaining on December 31, 2020. Before eliminating entries, GG had combined current assets of P525,000. What amount should GG report in its December 31, 2020 consolidated financial position for current assets?arrow_forwardPP Corp. owned 80% of KK Corp.'s common stock. During October 20x9, KK sold merchandise to PP for P140,000. At December 31, 20x9, 50% of this merchandise remained in Prince's inventory. For 20x9, gross profit percentages were 30% of sales for PP and 40% of sales for KK. The amount of unrealized intercompany profit in ending inventory at December 31, 20x9 that should be eliminated in the consolidation process isarrow_forward
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