Bates LtdOwns 60% of the Outstanding Common Shares of Sam Ltd

question 23

Multiple Choice

Bates Ltd.owns 60% of the outstanding common shares of Sam Ltd.During 20X6,sales from Sam to Bates were $200,000.Merchandise was priced to provide Sam with a gross margin of 20%.Bates' inventories contained $40,000 at December 31,20X5 and $15,000 at December 31,20X6 of merchandise purchased from Sam.Cost of goods sold for Bates and Sam for 20X6 on their separate-entity income statements were as follows:

What is cost of goods sold on the consolidated income statement for 20X6?

• A)$687,000
• B)$680,000
• C)$685,600
• D)$660,000

---

Definitions:

Lifecycle Stages

The distinct phases through which an organism or entity passes during its existence, from inception to conclusion.

Hierarchies

Systems of organization where entities are ranked according to levels of importance or status.

Psychodynamic Defense Mechanisms

Strategies employed by the unconscious mind to protect the individual from anxiety and unacceptable thoughts and feelings, delineated within psychodynamic theories of psychology.

Maladaptive

Behaviors or thoughts that may be counterproductive or inhibit a person's ability to adjust healthily to particular situations.