Perth Corporation owns 90 percent of Dundee Company\'s stock. At the end of 20X8

Question

Perth Corporation owns 90 percent of Dundee Company's stock. At the end of 20X8, Perth and Dundee reported the following partial operating results and inventory balances:

Based on the information given above, what balance will be reported for inventory in the consolidated balance sheet for December 31, 20X8?

$56,573

$23,846

$32,727

$67,000

Perth
Corporation Dundee
Company Total sales $500,000 $350,000 Sales to Dundee Company 100,000 Sales to Perth Corporation 150,000 Net income 15,000 Operating income (excluding investment income from Dunde) 56,000 Inventory on hand, December 31, 20X8, purchased from: Dundee Company 36,000 Perth Corporation 31,000

Explanation / Answer

Inventory of Dundee company without profit= 31000/(1+.30 markup by perth)

         = 31000/1.3

         = 23846.15

Inventory of perth without profit = 36000/(1+.10 profit by dundee)

        = 36000/1.1

        = 32727.27

Total inventory =32727.27+23846.15 = 56573

correct option is "A"

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