ABC Corporation owns 75 percent of XYZ Company's voting shares.During 2008,ABC produced 50,000 chairs at a cost of $79 each and sold 35,000 chairs to XYZ for $90 each.XYZ sold 18,000 of the chairs to unaffiliated companies for $117 each prior to December 31,2008,and sold the remainder in early 2009 for $130 each.Both companies use perpetual inventory systems.
-Based on the information given above,what amount of cost of goods sold did XYZ record in 2008?

Question

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XYZ purchased 35,000 chairs from ABC at a cost of $79 each, which results in $2,765,000 (35,000 x $79) cost of goods sold for XYZ. The subsequent sales by XYZ to unaffiliated companies are irrelevant in calculating XYZ's cost of goods sold.

ABC Corporation Owns 75 Percent of XYZ Company's Voting Shares