Pot Co Holds 90% of the Common Stock of Skillet Co

question 67

Multiple Choice

Pot Co. holds 90% of the common stock of Skillet Co. During 2013, Pot reported sales of $1,120,000 and cost of goods sold of $840,000. For this same period, Skillet had sales of $420,000 and cost of goods sold of $252,000.
Included in the amounts for Pot's sales were Pot's sales for merchandise to Skillet for $140,000. There were no sales from Skillet to Pot. Intra-entity sales had the same markup as sales to outsiders. Skillet had resold all of the intra-entity purchases from Pot to outside parties during 2013. What are consolidated sales and cost of goods sold for 2013?

• A) $1,400,000 and $952,000.
• B) $1,400,000 and $1,092,000.
• C) $1,540,000 and $952,000.
• D) $1,400,000 and $1,232,000.
• E) $1,540,000 and $1,092,000.

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Definitions:

Bivalves

Bivalves are a class of marine and freshwater mollusks that have bodies enclosed by a shell consisting of two hinged parts.

Muscular Foot

A muscular structure found in many mollusks used for movement and anchoring.

Gastropods

A class of mollusks that includes snails and slugs, characterized by their univalve shell (in snails) and distinctive crawling locomotion.

Hinged Shell

A shell structure composed of two parts connected by a flexible hinge, allowing the shell to open and close, commonly seen in bivalves like clams and oysters.