Cadion Co. owned a controlling interest in Knieval Inc. Cadion reported sales of $420,000 during 2013 while Knieval reported $280,000. Inventory costing $28,000 was transferred from Knieval to Cadion (upstream) during the year for $56,000. Of this amount, twenty-five percent was still in ending inventory at year's end. Total receivables on the consolidated balance sheet were $112,000 at the first of the year and $154,000 at year-end. No intra-entity debt existed at the beginning or ending of the year. Using the direct approach, what is the consolidated amount of cash collected by the business combination from its customers?
A) $602,000.
B) $644,000.
C) $686,000.
D) $714,000.
E) $592,000.

Question

Quizplus · Accepted Answer

Parent's Sales $420,000 + Sub's Sales $280,000 - Intra-Entity Sales $56,000 - Change in A/R $42,000 ($154,000 - $112,000) = $602,000 Consolidated Cash Collected

Cadion Co Owned a Controlling Interest in Knieval Inc