Pole Corporation owns 65 percent of Stick Company's stock.At the end of 20X3,Pole and Stick reported the following partial operating results and inventory balances:
Pole regularly prices its products at cost plus a 40 percent markup for profit.Stick prices its sales at cost plus a 25 percent markup.The total sales reported by Pole and Stick include both intercompany sales and sales to nonaffiliates.
-Based on the information given above,what amount of sales will be reported in the consolidated income statement for 20X3?

Question

Pole Corporation owns 65 percent of Stick Company's stock.At the end of 20X3,Pole and Stick reported the following partial operating results and inventory balances:
  Pole regularly prices its products at cost plus a 40 percent markup for profit.Stick prices its sales at cost plus a 25 percent markup.The total sales reported by Pole and Stick include both intercompany sales and sales to nonaffiliates.
-Based on the information given above,what amount of sales will be reported in the consolidated income statement for 20X3?

Quizplus · Accepted Answer

Sales from the parent company and the subsidiary are both included in the consolidated income statement. The parent company reported sales of $725,000, and the subsidiary reported sales of $125,000. Therefore, the total sales reported in the consolidated income statement for 20X3 will be $725,000 + $125,000 = $850,000.

Pole Corporation Owns 65 Percent of Stick Company's Stock