Barnes Company acquired 80 percent of the outstanding voting stock of Dean Company on January 1,2008.During 2008 Dean Company sold inventory costing $50,000 to Barnes Company for $80,000.Barnes Company continued to hold the inventory at December 31,2008.Also during 2008,Barnes Company sold merchandise costing $400,000 to nonaffiliates for $600,000,and on its separate balance sheet reported total inventory at year end of $140,000.In its separate financial statements,Dean Company reported total sales and cost of goods sold of $350,000 and $220,000,respectively,for 2008 and ending inventory of $150,000.
Required: Based on the above information,compute the amounts that should appear in the consolidated financial statements prepared for Barnes Company and it subsidiary,Dean Company,at year end for the following items: 1)sales;2)cost of goods sold;3)gross profit on sales;4)inventory.

Question

Quizplus · Accepted Answer

The Answer of Barnes Company acquired 80 percent of the outstanding voting stock of Dean Company on January 1,2008.During 2008 Dean Company sold inventory costing $50,000 to Barnes Company for $80,000.Barnes Company continued to hold the inventory at December 31,2008.Also during 2008,Barnes Company sold merchandise costing $400,000 to nonaffiliates for $600,000,and on its separate balance sheet reported total inventory at year end of $140,000.In its separate financial statements,Dean Company reported total sales and cost of goods sold of $350,000 and $220,000,respectively,for 2008 and ending inventory of $150,000.
Required: Based on the above information,compute the amounts that should appear in the consolidated financial statements prepared for Barnes Company and it subsidiary,Dean Company,at year end for the following items: 1)sales;2)cost of goods sold;3)gross profit on sales;4)inventory.

Barnes Company Acquired 80 Percent of the Outstanding Voting Stock