Question

A subsidiary sells merchandise to its parent at a markup of 25% on cost. In the...

A subsidiary sells merchandise to its parent at a markup of 25% on cost. In the current year, the parent had $75,000 in merchandise purchased from the subsidiary in its beginning inventory. During the current year, the parent paid $750,000 for merchandise from the subsidiary. By year-end, the parent has sold $700,000 of merchandise purchased from the subsidiary to outside customers for $900,000.

1.           

What is consolidated sales revenue for the year?

a.            $   900,000

b.            $1,650,000

c.            $1,500,000

d.            $   750,000

2.           

What is consolidated cost of goods sold for the year?

a.            $   900,000

b.            $1,300,000

c.            $   560,000

d.            $   750,000

3.

What is consolidated inventory at year-end?

a.            $125,000

b.            $100,000

c.            $ 25,000

d.            $200,000

Business   Accounting   
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The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

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