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Fraizer, Inc. acquired 100% of Eaton Enterprises on January 2, 2016. During 2016, Fraizer sold Eaton...

Fraizer, Inc. acquired 100% of Eaton Enterprises on January 2, 2016. During 2016, Fraizer sold

Eaton for $525,000 goods which had cost $375,000. Eaton still owned 20% of the goods at the end of the year. In 2017, Fraizer sold goods with a cost of $670,000 to Eaton for $850,000, and the buyer still owned 25% of the goods at year-end. For 2017, cost of goods sold was $5,160,000 for Fraizer and $930,000 for Eaton.

What was consolidated cost of goods sold for 2017?

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Answer #1
Fraizer Inc Holding Co
Sale Above On 2 Jan 2016
Eatson Enterprises 100% Subsy Co
Year Inter Company Sales COGS Profit Made Profit % on Cost
2016 525000 375000 150000 40%
Clsoing Stock at end Profit to be Eliminated
105000 30000 (Closing Stock/(1+Profit%))*Profit% 105000/(1+40%)*40%
Year Inter Company Sales COGS Profit Made Profit % on Cost
2017 850000 670000 180000 26.8657%
Clsoing Stock at end Profit to be Eliminated
212500 45000 (Closing Stock/(1+Profit%))*Profit% 212500/(1+26.8657%)*26.8657%
Fraizer Inc Eatson Enterprises
Cost of Goods Sold 5160000 930000
Less: Unrealised Gain 75000
Total 5085000 930000
Consolidated Cogs 6015000
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