Webb Co. acquired 100% of Rand Inc. on January 5, 2013. During 2013, Webb sold goods to Rand for $2,400,000 that cost Webb $1,800,000. Rand still owned 40% of the goods at the end of the year. Cost of goods sold was $10,800,000 for Webb and $6,400,000 for Rand. What was consolidated cost of goods sold?
A) $17,200,000.
B) $15,040,000.
C) $14,800,000.
D) $15,400,000.
E) $14,560,000.

Question

Quizplus · Accepted Answer

Intra-entity gross profit ($2,400,000 - $1,800,000) $600,000 × Inventory remaining at year's end 40% = $240,000Consolidated COGS = Parents COGS $10,800,000 + Sub's COGS $6,400,000 - Total Intra-Entity Transfer $2,400,000 + Deferred Unrealized Profit $240,000 = $15,040,000

Webb Co Acquired 100% of Rand Inc