Patti Company Owns 80% of the Common Stock of Shannon

question 112

Multiple Choice

Patti Company owns 80% of the common stock of Shannon, Inc. In the current year, Patti reports sales of $10,000,000 and cost of goods sold of $7,500,000. For the same period, Shannon has sales of $200,000 and cost of goods sold of $160,000. During the year, Patti sold merchandise to Shannon for $60,000 at a price based on the normal markup. At the end of the year, Shannon still possesses 30 percent of this inventory.Compute consolidated sales.

• A) $10,000,000.
• B) $10,126,000.
• C) $10,140,000.
• D) $10,200,000.
• E) $10,260,000.

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Definitions:

Fair Value

The price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Active Market

A market in which assets or securities are frequently traded, providing reliable price information and liquidity.