ScholarMatic: Explanation & Answer
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During 2018, a parent sold inventory priced at $500,000 to its
subsidiary, and the parent’s profits on these sales amounted to
$50,000. All inventory sold by the parent to the subsidiary was
sold by the subsidiary to outside customers during 2018. Here is
what the parent and subsidiary report for total sales, cost of
goods sold, and ending inventory at December 31, 2018 (for total
sales between the parent and subsidiary and to outside
customers):
|
Parent’s Books |
Subsidiary’s Books |
|
| Inventory |
$ 300,000 |
$ 150,000 |
| Sale revenue |
5,000,000 |
3,500,000 |
| Cost of goods sold |
4,000,000 |
2,700,000 |
At what amounts should the 2018 consolidated financial statements
report these three balances?
| A. |
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| B. |
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| C. |
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| D. |
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ScholarMatic: Explanation & Answer
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