Question

In: Accounting

1) Paula Corporation owns all of the voting common stock of Sally Company. Sally manufactures toys...

1) Paula Corporation owns all of the voting common stock of Sally Company. Sally manufactures toys and sells
them to Paula. In turn, Paula sells them to customers. Neither of these companies do anything else. At the
beginning of 2012 neither company had any inventory. During 2012 Sally manufactured 120,000 toys and
sold 100,000 of them to Paula for $10 each and Paula sold 90,000 of these toys to customers for $16 each.
These toys had cost Sally only $7 each to produce. During 2013 Sally manufactured 115,000 toys and sold
98,000 to Paula for $10 each. Paula sold 100,000 toys to customers during 2013 for $16 each. (The
manufacturing cost for Sally was still $7 per toy.) Please determine each of the following:
A. Total Consolidated Sales Revenue for 2013

B. Total Consolidated Cost of Goods Sold for 2013

C. Consolidated Ending Inventory for December 31, 2013

2) During 2014 Sally produced 200,000 toys at a cost of $7 each. Paula produced 30,000 books at a cost of $12
each. Sally sold 120,000 toys to Paula for $10 each and 50,000 toys to customers for $15 each. Paula sold
110,000 of the toys to customers for $16 each and 20,000 books to customers for $20 each. Please
determine each of the following:
A. Total Consolidated Sales Revenue for 2014

B. Total Consolidated Cost of Goods Sold for 2014

C. Consolidated Ending Inventory for December 31, 2014

Part II
t the beginning of 2014 Peri Co. created a wholly owned subsidiary, Speri Co., to handle the marketing and sales of its
products. During 2014 Peri manufactured goods for a total cost of $1,000,000. It sold 80% of these items to Speri for
$1,200,000. Speri sold 75% of what it purchased from Peri to customers for $1,500,000. (Peri only sold to Speri and
Speri only purchased from Peri.) In the 2014 annual consolidated financial statements for Peri and Speri, what should
be reported for each of the following:
A. Total Consolidated Sales Revenue for 2014

B. Total Consolidated Cost of Goods Sold for 2014

C. Consolidated Ending Inventory for December 31, 2014

Solutions

Expert Solution

ekkarill92 answered 1 year ago
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