Poole Co. acquired 100% of Mullen Inc. on January 3, 2021. During 2021, Poole sold goods...

Poole Co. acquired 100% of Mullen Inc. on January 3, 2021. During 2021, Poole sold goods to Mullen for $2,500,000 that cost Poole $1,850,000. Mullen still owned 30% of the goods at the end of the year. Cost of goods sold was $11,200,000 for Poole and $6,600,000 for Mullen. What was consolidated cost of goods sold?

Multiple Choice

$15,105,000.
$15,300,000.
$15,495,000.
$17,800,000.

Expert Solution

Cost of goods sold of Poole = $11200000
Cost of goods sold of Mullen = $6600000


Value of goods sold by Poole to third party = $11200000 - $1850000
	= $9350000

Markup on sales from transfer from Poole to Mullen = ($2500000-$1850000)/$2500000
	= 26%

Stock transfer from Poole included in Cost of goods sold of Mullen = $2500000*70%
		= $1750000

Cost of goods sold of Mullen excluding goods transferred from Poole = $6600000-$1750000
		= $4850000

Cost of goods transferred from Poole included in Mullen's cost of goods sold = $1750000-($1750000*26%)
		= $1295000


Therefore,
Total consolidated cost of goods sold = A+D+E

	= $9350000+$4850000+$1295000
	= $15495000

Therefore 3rd option is the correct answer.

ekkarill92 answered 1 year ago

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