Parkette, Inc., acquired a 60 percent interest in Skybox Company several years ago. During 2017, Skybox...

Parkette, Inc., acquired a 60 percent interest in Skybox Company several years ago. During 2017, Skybox sold inventory costing $188,000 to Parkette for $235,000. A total of 13 percent of this inventory was not sold to outsiders until 2018. During 2018, Skybox sold inventory costing $225,320 to Parkette for $262,000. A total of 30 percent of this inventory was not sold to outsiders until 2019. In 2018, Parkette reported cost of goods sold of $577,500 while Skybox reported $365,000. What is the consolidated cost of goods sold in 2018?

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UNREALIZED GROSS PROFIT, 12/31/17

Intra-entity gross profit ($235,000 – $188,000) .................................. $47,000

Inventory remaining at year's end ....................................................... 13%

Unrealized intra-entity gross profit, 12/31/17 .................................... $6,110

UNREALIZED GROSS PROFIT, 12/31/18

Intra-entity gross profit ($262,000 – $225,320) .................................. $36,680

Inventory remaining at year's end ....................................................... 30%

Unrealized intra-entity gross profit, 12/31/18 .................................... $11,004

CONSOLIDATED COST OF GOODS SOLD

Parent balance .................................................................................... $577,500

Subsidiary balance ............................................................................ 365,000

Remove intra-entity transfer ........................................................... (262,000)

Recognize 2017 deferred gross profit .......................................... (6,110)

Defer 2018 unrealized gross profit ................................................ 11,004

Cost of goods sold .................................................................................. $685,394

ekkarill92 answered 1 year ago

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