Bates Ltd.owns 60% of the outstanding common shares of Sam Ltd.During 20X6,sales from Sam to Bates were $200,000.Merchandise was priced to provide Sam with a gross margin of 20%.Bates' inventories contained $40,000 at December 31,20X5 and $15,000 at December 31,20X6 of merchandise purchased from Sam.Cost of goods sold for Bates and Sam for 20X6 on their separate-entity income statements were as follows:

What is cost of goods sold on the consolidated income statement for 20X6?
A)$687,000
B)$680,000
C)$685,600
D)$660,000

Question

Bates Ltd.owns 60% of the outstanding common shares of Sam Ltd.During 20X6,sales from Sam to Bates were $200,000.Merchandise was priced to provide Sam with a gross margin of 20%.Bates' inventories contained $40,000 at December 31,20X5 and $15,000 at December 31,20X6 of merchandise purchased from Sam.Cost of goods sold for Bates and Sam for 20X6 on their separate-entity income statements were as follows:

What is cost of goods sold on the consolidated income statement for 20X6?

What is cost of goods sold on the consolidated income statement for 20X6?
A)$687,000 
B)$680,000 
C)$685,600 
D)$660,000

Quizplus · Accepted Answer

The Answer of Bates Ltd.owns 60% of the outstanding common shares of Sam Ltd.During 20X6,sales from Sam to Bates were $200,000.Merchandise was priced to provide Sam with a gross margin of 20%.Bates' inventories contained $40,000 at December 31,20X5 and $15,000 at December 31,20X6 of merchandise purchased from Sam.Cost of goods sold for Bates and Sam for 20X6 on their separate-entity income statements were as follows:

What is cost of goods sold on the consolidated income statement for 20X6?
A)$687,000 
B)$680,000 
C)$685,600 
D)$660,000

Bates LtdOwns 60% of the Outstanding Common Shares of Sam Ltd