Nderson Company, a 90% owned subsidiary of Philbin Corporation, transfers inventory to Philbin at a 25% gross profit rate. The following data are available pertaining specifically to Philbin’s intra-entity purchases from Anderson. Anderson was acquired on January 1, 2020. 2020 2021 2022 Purchases by Philbin $ 8,000 $ 12,000 $ 15,000 Ending inventory on Philbin’s books 1,200 4,000 3,000 Assume the equity method is used.
Nderson Company, a 90% owned subsidiary of Philbin Corporation, transfers inventory to Philbin at a 25% gross profit rate. The following data are available pertaining specifically to Philbin’s intra-entity purchases from Anderson. Anderson was acquired on January 1, 2020. 2020 2021 2022 Purchases by Philbin $ 8,000 $ 12,000 $ 15,000 Ending inventory on Philbin’s books 1,200 4,000 3,000 Assume the equity method is used.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter8: Cost Analysis
Section: Chapter Questions
Problem 2E
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Nderson Company, a 90% owned subsidiary of Philbin Corporation, transfers inventory to Philbin at a 25% gross profit rate. The following data are available pertaining specifically to Philbin’s intra-entity purchases from Anderson. Anderson was acquired on January 1, 2020.
2020 | 2021 | 2022 | |||||||
Purchases by Philbin | $ | 8,000 | $ | 12,000 | $ | 15,000 | |||
Ending inventory on Philbin’s books | 1,200 | 4,000 | 3,000 | ||||||
Assume the equity method is used. The following data are available pertaining to Anderson’s income and dividends.
2020 | 2021 | 2022 | |||||||
Anderson’s net income | $ | 70,000 | $ | 85,000 | $ | 94,000 | |||
Dividends paid by Anderson | 10,000 | 10,000 | 15,000 | ||||||
Compute the equity in earnings of Anderson reported on Philbin’s books for 2020.
Multiple Choice
$63,000.
$70,000.
$62,700.
$62,730.
$63,270.
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