Question
In: Accounting
Ariel owns 70% of Sabastian. During 2019, Sabastian sold 1000 units of Inventory to Ariel for...
Ariel owns 70% of Sabastian. During 2019, Sabastian sold 1000 units of Inventory to Ariel for $70 each. The units cost $50 to produce. A 12/31/2019 inventory count indicates that 300 units remained in Ariel's inventory. Sabastian reported a $50,000 net income in 2019 and a $70,000 net income in 2020. No internal sales were made in 2020. Ariel should recognize investment income in 2020 for which of the following amounts?
Investment in Sabastian $44,800
...Investment Income $44,800
Investment in Sabastian $49,000
...Investment Income $49,000
Investment in Sabastian $53,200
...Investment Income $53,200
Investment in Sabastian $63,000
...Investment Income $63,000
Solutions
Expert Solution
| Working Notes: | ||
| Calculation of inter company profit generated during the period | ||
| Sales = (300 Units X $ 70) | $ 21,000 | |
| Less: Cost of sales (3000 Units X $ 50) | $ 15,000 | |
| Profit Generated on inter company sales | $ 6,000 | |
| Solution: | ||
| CALCULATION OF INCOME COMPANY PROFIT RECOGNIZE IN THE YEAR 2020 | ||
| Net income reported by Sabastian | $ 70,000 | |
| Less: Elimination of inter-company profit (Notes) | $ 6,000 | |
| Actual Profit of Sabastian | $ 64,000 | |
| Share of Ariel = $ 64,000 X 70% = | $ 44,800 | |
| Answer = Investment in Sabastian = $ 44,800 | ||
ekkarill92 answered 1 year agoRelated Solutions
Ariel owns 70% of Sabastian. During 2019, Sabastian sold 1000 units of inventory to Ariel for...
Ariel owns 70% of Sabastian. During 2019, Sabastian sold 1000
units of inventory to Ariel for $70 each. The units cost $50 to
produce. A 12/31/2019 inventory count should indicate that 300
units remained in Ariels inventory. S reported a $50,000 net income
in 2019. Ariel should recognize income in 2019 for which of the
following amounts?
Investment in Sabastian $35,000
...investment income. $35,000
Investment in Sabastian $30,800
...Investment Income $30,800
21,000
None of the above
PART ONE: Ariel owns 70% of Sabastian. During 2019, Sabastian sold 1000 units of inventory to...
PART ONE: Ariel owns 70% of Sabastian. During 2019, Sabastian
sold 1000 units of inventory to Ariel for $70 each. The units cost
$50 to produce. A 12/31/2019 inventory count should indicate that
300 units remained in Ariels inventory. S reported a $50,000 net
income in 2019. Ariel should recognize income in 2019 for which of
the following amounts?
Investment in Sabastian $35,000
...investment income. $35,000
Investment in Sabastian $30,800
...Investment Income $30,800
21,000
None of the above
PART TWO:...
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and Cost of Goods Sold line be adjusted for this transaction? (use
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3. During 2019, Tonka Industries collected $53,600 from
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During the month of August, Shelly sold 26 units and reports the following inventory and purchase...
During the month of August, Shelly sold 26 units and reports the
following inventory and purchase information:
Date
Explanation
Units
Unit Cost
Total Cost
August 1
Beginning inventory
12
$250
$3,000
August 13
Purchase
13
300
3,900
August 22
Purchase
10
310
3,100
August 29
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320
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enter the ending inventory at August 31 using the FIFO, LIFO
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enter the cost of goods sold at August 31 using the FIFO, LIFO
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Jose Zorilla uses a perpetual inventory system. During April, he sold 700 units, (270 units on...
Jose Zorilla uses a perpetual inventory system. During April,
he sold 700 units, (270 units on April 20 and 430 units on April
28). The following other information is available:
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Unit Cost
Total
Cost
April 1 inventory
250
$12.20
$3,050.00
April 15 purchase
400
17.20
6,880.00
April 23 purchase
350
15.30
5,355.00
1,000
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Calculate the April 30 inventory and the April cost of goods
sold using the weighted average cost formula. (Round
the weighted average cost per unit...
Jose Zorilla uses a perpetual inventory system. During April, he sold 700 units, (270 units on...
Jose Zorilla uses a perpetual inventory system. During April, he
sold 700 units, (270 units on April 20 and 430 units on April 28).
The following other information is available:
Units
Unit Cost
Total
Cost
April 1 inventory
250
$12.20
$3,050.00
April 15 purchase
400
16.20
6,480.00
April 23 purchase
350
14.00
4,900.00
1,000
$14,430.00
Calculate the April 30 inventory and the April cost of goods
sold using the weighted average cost formula. (Round
the weighted average cost per unit...
Jose Zorilla uses a perpetual inventory system. During April, he sold 700 units, (270 units on...
Jose Zorilla uses a perpetual inventory system. During April, he
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The following other information is available:
Units
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Total Cost
April 1 inventory
250
$12.20
$3,050.00
April 15 purchase
400
17.20
6,880.00
April 23 purchase
350
15.60
5,460.00
1,000
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