Pepper Corporation owns 75 percent of Salt Company's voting shares. During 20X8, Pepper produced 50,000 chairs at a cost of $79 each and sold 35,000 chairs to Salt for $90 each. Salt sold 18,000 of the chairs to unaffiliated companies for $117 each prior to December 31, 20X8, and sold the remainder in early 20X9 to unaffiliated companies for $130 each. Both companies use perpetual inventory systems. Based on the information given above, what amount of cost of goods sold must be eliminated from the consolidated income statement for 20X9? Multiple Choice A. $221,000 B.$1,422,000 C.$187,000 D.$2,963,000

Pepper Corporation owns 75 percent of Salt Company's voting shares. During 20X8, Pepper produced 50,000 chairs at a cost of $79 each and sold 35,000 chairs to Salt for $90 each. Salt sold 18,000 of the chairs to unaffiliated companies for $117 each prior to December 31, 20X8, and sold the remainder in early 20X9 to unaffiliated companies for $130 each. Both companies use perpetual inventory systems. Based on the information given above, what amount of cost of goods sold must be eliminated from the consolidated income statement for 20X9? Multiple Choice A. $221,000 B.$1,422,000 C.$187,000 D.$2,963,000

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter2: Income Tax Concepts

Section: Chapter Questions

Problem 24P

See similar textbooks

Similar questions

Pepper Corporation owns 75 percent of Salt Company's voting shares. During 20X8, Pepper produced 50,000 chairs at a cost of $79 each and sold 35,000 chairs to Salt for $90 each. Salt sold 18,000 of the chairs to unaffiliated companies for $117 each prior to December 31, 20X8, and sold the remainder in early 20X9 to unaffiliated companies for $130 each. Both companies use perpetual inventory systems. Based on the information given above, what amount of cost of goods sold must be eliminated from the consolidated income statement for 20X8? Multiple Choice A. $2,963,000 B. $1,620,000 C. $2,765,000 D. $1,422,000
Pepper Corporation owns 75 percent of Salt Company's voting shares. During 20X8, Pepper produced 50,000 chairs at a cost of $79 each and sold 35,000 chairs to Salt for $90 each. Salt sold 18,000 of the chairs to unaffiliated companies for $117 each prior to December 31, 20X8, and sold the remainder in early 20X9 to unaffiliated companies for $130 each. Both companies use perpetual inventory systems. Based on the information given above, what amount of cost of goods sold must be reported in the consolidated income statement for 20X8? Multiple Choice A. $1,422,000B. $2,963,000 C. $1,620,000 D. $2,765,000
Planner Corporation owns 60 percent of Schedule Company’s voting shares. During 20X3, Planner produced 29,000 computer desks at a cost of $96 each and sold 14,000 of them to Schedule for $108 each. Schedule sold 9,000 of the desks to unaffiliated companies for $134 each prior to December 31, 20X3, and sold the remainder in early 20X4 for $144 each. Both companies use perpetual inventory systems. Required: What amounts of cost of goods sold did Planner and Schedule record in 20X3? What amount of cost of goods sold must be reported in the consolidated income statement for 20X3? Prepare the worksheet consolidation entry or entries needed in preparing consolidated financial statements at December 31, 20X3, relating to the intercorporate sale of inventory.
Brandy Corporation owns 60 percent of Downer's voting shares. During 20X3, Brandy produced 50,000 computer desks at a cost of $82 each and sold 20,000 of them to Draw for $94 each. Downer sold 14,000 of the desks to unaffiliated companies for $130 each prior to December 31, 20X3, and sold the remainder in early 20X4 for $140 each. Both companies use perpetual inventory systems. Tax rate is 30 percent. Required What amounts of cost of goods sold did Brandy and Downer record in 20X3? What amount of cost of goods sold must be reported in the consolidated income statement for 20X3? Prepare the necessary journal entry to eliminate the intra-gorup sales and cost of goods sold.
Planner Corporation owns 60 percent of Schedule Company’s voting shares. During 20X3, Planner produced 29,000 computer desks at a cost of $96 each and sold 14,000 of them to Schedule for $108 each. Schedule sold 9,000 of the desks to unaffiliated companies for $134 each prior to December 31, 20X3, and sold the remainder in early 20X4 for $144 each. Both companies use perpetual inventory systems. Prepare the worksheet consolidation entry or entries needed in preparing consolidated financial statements at December 31, 20X4, relating to the intercorporate sale of inventory. Prepare the worksheet consolidation entry or entries needed in preparing consolidated financial statements at December 31, 20X4, relating to the intercorporate sale of inventory if the sales were upstream. Assume that Schedule produced the computer desks at a cost of $96 each and sold 14,000 desks to Planner for $108 each in 20X3, with Planner selling 9,000 desks to unaffiliated companies in 20X3 and the remaining…
Baxter, Inc., owns 90 percent of Wisconsin, Inc., and 20 percent of Cleveland Company. Wisconsin, in turn, holds 60 percent of Cleveland’s outstanding stock. No excess amortization resulted from these acquisitions. During the current year, Cleveland sold a variety of inventory items to Wisconsin for $40,000 although the original cost was $30,000. Of this total, Wisconsin still held $12,000 in inventory (at transfer price) at year-end.During this same period, Wisconsin sold merchandise to Baxter for $100,000 although the original cost was only $70,000. At year-end, $40,000 of these goods (at the transfer price) was still on hand.The initial value method was used to record each of these investments. None of the companies holds any other investments.Using the following separate income statements, determine the figures that would appear on a consolidated income statement:
Baxter, Inc., owns 90 percent of Wisconsin, Inc., and 20 percent of Cleveland Company. Wisconsin, in turn, holds 60 percent of Cleveland's outstanding stock. No excess amortization resulted from these acquisitions. During the current year, Cleveland sold a variety of inventory items to Wisconsin for $40,000 although the original cost was $30,000. Of this total, Wisconsin still held $12,000 in inventory (at transfer price) at year-end. During this same period, Wisconsin sold merchandise to Baxter for $100,000 although the original cost was only $70,000. At year-end, $40,000 of these goods (at the transfer price) was still on hand. The initial value method was used to record each of these investments. None of the companies holds any other investments. Using the following separate income statements, determine the figures that would appear on a consolidated income statement: Baxter Wisconsin Cleveland Sales $ (1,000,000 ) $ (450,000 ) $ (280,000 ) Cost of goods sold…
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?
Goddy 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.
Lorn Corporation purchased inventory from Dresser Corporation for P120,000 on September 20, 20x2, and resold 80% of the purchased inventory to unaffiliated companies prior to December 31, 20x2, for P140,000. Dresser produced the inventory sold to Lorn for P75,000. Lorn owns 70% of Dresser’s voting common stock. The companies had no other transactions during 20x2. What amount of cost of goods sold will be reported in the 20x2 consolidated income statement? A. P60,000 C. P96, 000B. P75, 000 D. P120, 000 E. P171, 000
Ram Company bought all the shares of Lal Company on January 1, Year 1 for 2,000,000. During that year Ram sold Lal for 80,000. inventory that had cost him $40,000. At the end of the period, LAL still had not sold the inventory to outsiders, but still owed Ram the $50,000. For that year, Ram has a balance of 550,000 in cost of goods sold and Lal of 150,000. What should be the total cost of goods sold presented in the consolidated statement of income and expenses? 650,000 700,000 660,000 640,000
Lorn Corporation purchased inventory from Dresser Corporation for P 120,000 on September 20, 20x2, and resold 80% of the purchased inventory to unaffiliated companies prior to December 31, 20x2, for P140,000. Dresser produced the inventory sold to Lorn for P75,000. Lorn owns 70% of Dresser’s voting common stock. The companies had no other transactions during 20x2. What amount of cost of goods sold will be reported in the 20x2 consolidated income statement? A. P60, 000 B. P75, 000 C. P96, 000 D. P120, 000 E. P171, 000