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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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
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Date
Explanation
Units
Unit Cost
Total Cost
August 1
Beginning inventory
12
$250
$3,000
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Purchase
13
300
3,900
August 22
Purchase
10
310
3,100
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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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$12.20
$3,050.00
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400
17.20
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15.30
5,355.00
1,000
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Calculate the April 30 inventory and the April cost of goods
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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
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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
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Calculate the April 30 inventory and the April cost of goods
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Jose Zorilla uses a perpetual inventory system. During April, he sold 700 units, (270 units on...
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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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