Patti Company Owns 80% of the Common Stock of Shannon

question 117

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 cost of goods sold.

• A) $7,500,000.
• B) $7,600,000.
• C) $7,615,000.
• D) $7,604,500.
• E) $7,660,000.

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Definitions:

Fee-For-Service

A payment model where services are unbundled and paid for separately, common in healthcare.

Rural Chinese

Pertaining to the lives, cultures, and communities of people living in the rural areas of China, often characterized by agricultural livelihoods and traditional practices.

National Health Service

A publicly funded healthcare system in certain countries, providing a wide range of health services to residents, mostly free at the point of use.

Capitalistic

Pertaining to capitalism, an economic system characterized by private or corporate ownership of goods and the means to produce them.