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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 2 years ago
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