Patti Corp

question 9

Multiple Choice

Patti Corp. has several subsidiaries (Aeta, Beta, and Gaeta) that are included in its consolidated financial statements. In its 12/31/X1 separate balance sheet, Patti had the following intercompany balances before eliminations: In its 12/31/X1 consolidated balance sheet, what amount should Patti report as intercompany receivables?

• A) $166,000
• B) $51,000
• C) $26,000
• D) $0

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Definitions:

Direct Materials Cost

The expense associated with raw materials that are directly included in the manufacturing of a product, an important component of total production cost.

Work in Process Account

A financial account found in the ledgers of manufacturing companies where costs related to the production process that are not yet complete are recorded.

Direct Labor Cost

Expenses related to employees who directly work on the manufacturing of products, distinct from indirect labor involved in supervisory and administrative roles.

Overapplied Manufacturing Overhead

A scenario in which the overhead assigned to goods or services surpasses the actual costs, necessitating adjustments in financial accounting.