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 2 years 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:...
Perez owns 70% of Junior, Inc. During the year just ended, Perez sold goods to Junior...
Perez owns 70% of Junior, Inc. During the year just ended, Perez
sold goods to Junior for $474,533 with a 36% gross profit. Junior
sold all of these goods during the year. In its consolidated
financial statements for the year, by what amount should the Sales
and Cost of Goods Sold line be adjusted for this transaction? (use
a plus sign for an increase and a minus sign for a decrease).
2. Tonka Industries sold inventory to customers on account totaling $90,000 during 2019. The inventory cost...
2. Tonka Industries sold inventory to customers on account
totaling $90,000 during 2019. The inventory cost Tonka Industries
$42,000.
3. During 2019, Tonka Industries collected $53,600 from
customers who previously charged on account.
4. On December 31, 2019, Tonka Industries recorded its
uncollectible accounts estimate. Tonka Industries estimates that
$1,350 will be uncollectible.
5. On February 19, 2020, Tonka Industries received notification
that Jan Levinson, who owes Tonka Industries $900, has filed for
bankruptcy. Tonka Industries writes off Ms. Levinson’s...
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
Purchase
20
320
6,400
enter the ending inventory at August 31 using the FIFO, LIFO
and average-cost methods.
enter the cost of goods sold at August 31 using the FIFO, LIFO
and average-cost methods.
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
17.20
6,880.00
April 23 purchase
350
15.30
5,355.00
1,000
$15,285.00
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
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
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
17.20
6,880.00
April 23 purchase
350
15.60
5,460.00
1,000
$15,390.00
1.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...
during january, tedesco company sold 183 units of product k. It's beginning inventory and purchases during...
during january, tedesco company sold 183 units of product k.
It's beginning inventory and purchases during the month were as
following: january. 1- beginng inventory 100 units @ $41, january 5
-purchases 100 units @ $43, january 10 -purchases 100 units @ $38,
january 15- purchases 100 units @ $50, january 20- purchases 100
units @ $48. Using the periodic inventory system compute the ending
inventory and the cost of goods sold using the methods: a) average
cost, b) FIFO,...
The following transactions occurred for the Levy Company during 2019: Beginning inventory consists of 50 units...
The following transactions occurred for the Levy Company during
2019: Beginning inventory consists of 50 units with a price per
unit of $40. Transactions during 2019 (in order) were: 1) Purchased
100 units @ $42 2) Purchased 110 units @ $43 3) Sold 190 units
Required: a) Use the above information and compute the ending
inventory and cost of goods sold for 2018 assuming is used:
periodic LIFO, periodic FIFO, WAC. b) Assume the use of LIFO and a
market...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- The legal landscape is perpetually changing. Psychologists must remain abreast of these changes to avoid potentially...
- We are evaluating a project that costs $1.68 million, has a six-year life, and has no...
- In C++ Having call-by-reference allows one to use storeback parameters, i.e., parameters whose values are transmitted...
- You must evaluate a proposal to buy a new milling machine. The base price is $175,000,...
- “Triangle Guessing” game in Python The program accepts the lengths of three (3) sides of a...
- THIS PROGRAM HAS TO BE WRITTEN IN C Single function to perform the parity computation on...
- Consider a buffer system consisting of Benzoic acid (pKa = 4.20) and sodium benzoate, a) Would...
ADVERTISEMENT