Silver Company owns 60 percent of the common stock of Gold Corporation.During the year,Silver reported sales of $500,000,and Gold reported sales of $200,000,including sales to Silver of $50,000.The amount of sales that should be reported in the consolidated income statement for the year is
A) $500,000
B) $650,000
C) $700,000
D) $750,000

Question

Quizplus · Accepted Answer

In a consolidated income statement, intercompany sales are eliminated. Therefore, the sales from Gold to Silver ($50,000) should be subtracted from the total combined sales of Silver and Gold ($500,000 + $200,000 = $700,000), resulting in $650,000.

Silver Company Owns 60 Percent of the Common Stock of Gold