Pink Corporation owns 80 percent of Sink Company's voting shares.During 20X4,Pink produced 60,000 smart phones at a cost of $62 each and sold 45,000 smart phones to Sink for $93 each.Sink sold 26,000 of the smart phones to unaffiliated companies for $128 each prior to December 31,20X4,and sold the remainder in early 20X5 to unaffiliated companies for $133 each.Both companies use the perpetual inventory systems.
-Based on the information given above,what amount of cost of goods sold did Pink record in 20X4?

Question

Quizplus · Accepted Answer

Pink Corporation's cost of goods sold (COGS) for 20X4 includes the cost of the smart phones it sold to Sink Company. Pink produced 60,000 smart phones at a cost of $62 each, but we are only interested in the 45,000 units it sold to Sink, as these are the ones that would be included in Pink's COGS for the period. The calculation is 45,000 units * $62 = $2,790,000.

Pink Corporation Owns 80 Percent of Sink Company's Voting Shares