Wilson Ltd What Is Cost of Goods Sold on the Consolidated Income

question 48

Multiple Choice

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

• A)$687,000
• B)$685,000
• C)$660,000
• D)$680,000

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Definitions:

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash, bank deposits, and other liquid assets.

Investment

The allocation of resources, such as capital or time, in expectation of generating a profit or income.

Industry Life Cycle

Stages through which firms typically pass as they mature.

Market Penetration

A measure of the extent of sales or adoption of a product or service compared to the total theoretical market for that product or service.