Levi Ltd Owns 60% of the Outstanding Common Shares of Modry

question 51

Multiple Choice

Levi Ltd. owns 60% of the outstanding common shares of Modry Ltd. During 2013, sales from Modry to Levi were $200,000. Merchandise was priced to provide Modry with a gross margin of 20%. Levi's inventories contained $40,000 at December 31, 2012 and $15,000 at December 31, 2013 of merchandise purchased from Modry. Cost of goods sold for Levi and Modry for 2013 on their separate-entity income statements were as follows: $\begin{array}{|l|r|r|} \hline& \text { Levi } & \text { Modry } \\\hline \text { Beginning inventory } & \$ 100,000 & \$ 50,000 \\\hline \text { Purchases } & 700,000 & 200,000 \\\hline \text { Ending inventory } & (110,000) & (55,000) \\\hline \text { Cost of goods sold } & \$ 690,000 & \$ 195,000 \\\hline\end{array}$ What is the balance of the inventory account on Levi's consolidated statement of financial position at December 31, 2013?

• A)$162,000
• B)$140,000
• C)$160,000
• D)$165,000

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