Patti Company owns 80% of the common stock of Shannon, Inc. In the current year, Patti reports sales of $10,000,000 and cost of goods sold of $7,500,000. For the same period, Shannon has sales of $200,000 and cost of goods sold of $160,000. During the year, Patti sold merchandise to Shannon for $60,000 at a price based on the normal markup. At the end of the year, Shannon still possesses 30% of this inventory.
1. Compute consolidated cost of goods sold.
A. $7,600,000
B. $7,604,500
C. $7,500,000
D. $7,660,000
2. Assume the same information above, except Shannon sold inventory to Patti. Compute consolidated sales.
A. $10,140,000
B. $10,126,000
C. $10,260,000
D. $10,000,000