Question

Xanadu Company, a 100% owned subsidiary of Richland Corporation, sells inventory to Robertson at a 30%...

Xanadu Company, a 100% owned subsidiary of Richland Corporation, sells inventory to Robertson at a 30% profit on selling price. The following data are available pertaining to inter-company purchases by Robertson:

Inter-company sales

Unsold at year end

(based on selling price)

2016:

$17,600

2016:

$3,200

2017:

$24,300

2017:

$5,700

2018:

$27,000

2018:

$4,800

Xanadu’s profit numbers were $113,000, $204,000 and $225,600 for 2016, 2017, and 2018, respectively. Richland received dividends from Xanadu of $21,000 for 2016 and 2017, and $25,000 for 2018.

1. What would be the net debit or credit to cost of goods sold on the 2017 consolidation worksheet?

a.   $24,300 credit

b. $23,550 credit

c.   $25,050 credit

d.   $    750 debit

Homework Answers

Answer #1

Years

Intercompany sales

Unsold at selling price

Unrealized profit on inventory (unsold at selling price * 30%)

2016

17600

3200

960

2017

24300

5700

1710

Net treatment to cost of goods sold

Unrealized profit on ending inventory

1710

Debit

Less: unrealized profit on beginning inventory

-960

Credit

Net impact on cost of goods sold for year 2017 consolidation worksheet

750

Debit

Correct answer is D

750 debit

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Xanadu Company, a 100% owned subsidiary of Richland Corporation, sells inventory to Robertson at a 30%...
Xanadu Company, a 100% owned subsidiary of Richland Corporation, sells inventory to Robertson at a 30% profit on selling price. The following data are available pertaining to inter-company purchases by Robertson: Inter-company sales Unsold at year end (based on selling price) 2016: $17,600 2016: $3,200 2017: $24,300 2017: $5,700 2018: $27,000 2018: $4,800 Xanadu’s profit numbers were $113,000, $204,000 and $225,600 for 2016, 2017, and 2018, respectively. Richland received dividends from Xanadu of $21,000 for 2016 and 2017, and $25,000...
Anderson Company, a 90% owned subsidiary of Philbin Corporation, transfers inventory to Philbin at a 30%...
Anderson Company, a 90% owned subsidiary of Philbin Corporation, transfers inventory to Philbin at a 30% 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 3,000 7,000 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...
Gargiulo Company, a 90% owned subsidiary of Posito Corporation, sells inventory to Posito at a 25%...
Gargiulo Company, a 90% owned subsidiary of Posito Corporation, sells inventory to Posito at a 25% profit on selling price. The following data are available pertaining to intra-entity purchases. Gargiulo was acquired on January 1, 2012. Assume the equity method is used. The following data are available pertaining to Gargiulo's income and dividends.    2012    2013    2014 Purchases by Posito    $8,000    $12,000    $15,000 Ending inventory on Posito's books    $1,200 $4,000    $3,000 Gargiulo's net...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT