P Company Regularly Sells Merchandise to Its 80%-Owned Subsidiary, S

question 5

Multiple Choice

P Company regularly sells merchandise to its 80%-owned subsidiary, S Corporation. In 2016, P sold merchandise that cost $192,000 to S for $240,000. Half of this merchandise remained in S's December 31, 2016 inventory. During 2017, P sold merchandise that cost $300,000 to S for $375,000. Forty percent of this merchandise inventory remained in S's December 31, 2017 inventory. Selected income statement information for the two affiliates for the year 2017 is as follows: Consolidated cost of goods sold for P Company and Subsidiary for 2017 are:

• A) $1,809,000.
• B) $1,815,000.
• C) $1,821,000.
• D) $2,190,000.

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Definitions:

Continental Drift

A theory that explains the gradual movement of continents across the earth's surface through geological time.

Glacial Deposits

Materials left behind by glaciers as they advance and retreat, including rocks, sediments, and debris.

Fossils

The preserved remains or impressions of organisms from the past, typically found in sedimentary rock.

Scratch Marks

Linear erosional features on rock surfaces, often caused by the movement of glaciers or other sediment-laden flows.