interestS 24. P owns 100% of S. During the year, P sells items to S. The items c

Question

interestS 24. P owns 100% of S. During the year, P sells items to S. The items cost P S40, and it sell them to S for $70. Which of the following statements is correct about the appropriate a. An entry to eliminate $70 of sales and $70 of cost of goods sold is only needed if b. An entry to eliminate $40 of sales and $40 of cost of goods sold is only needed if consolidation entry regarding this transaction? all the items are still on hand at year end. all the items are still on hand at year end. An entry is always needed to eliminate $70 of sales and S70 of Cost of Goods sold c. d. An entry is always needed to eliminate $40 of sales and S$40 of cost of goods sold On their separate records, Sub Corp. has cost of goods sold for this year equal to $4,000 and Parent has cost of goods sold equal to $12,000. During the year, Parent sold goods costing $2,000 to sub for $3,000. At the end of the year, Sub still has all $3000 in 25. its ending inventory. Based on these facts, consolidated cost of goods sold should equal: a. $11,000 b. $13,000 c. $14,000 d. $15,000 e. $16,000

Explanation / Answer

24. b. An entry to eliminate $40 of sales and $40 of cost of goods sold is only needed if all the items are still on hand at year end.

25. d. $15,000

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