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In: Accounting

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: This problem is based on information in the previous problem. 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 indicated the 300 units remained in Ariels inventory. Sabastian reported a $50,000 net income in 2019 and $70,000 in 2020. Which of the following worksheet entries should Ariel make to consolidate trial balances on 12/31/2019 in response to the internal sale?

Sales. $21,000

...COGS. $15,000

...Inventory. $6,000

Sales. $70,000

...COGS 50,000

...Inventory $20,000

Inventory 20,000

COGS 50,000

...Sales 70,000

PART THREE: This problem is based on information in the preceding problem. 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

Answer :

part one :

working note :

part two :

part three :

ekkarill92 answered 2 years ago
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