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ABC Corporation owns 75 percent of XYZ Company's voting shares. During 20X8, ABC produced 50,000 chairs at a cost of $79 each and sold 35,000 chairs to XYZ for $90 each. XYZ sold 18,000 of the chairs to unaffiliated companies for $117 each prior to December 31, 20X8, and sold the remainder in early 20X9 to unaffiliated companies for $130 each. Both companies use perpetual inventory systems. Based on the information given above, what amount of cost of goods sold did ABC record in 20X8 prior to consolidation

Sagot :

abiolataiwo2015

Answer:

$2,765,000

Explanation:

Calculation to determine what amount of cost of goods sold did ABC record in 20X8 prior to consolidation

Cost of goods sold= $79 each* 35,000

Cost of goods sold=$2,765,000

Therefore the amount of cost of goods sold that ABC record in 20X8 prior to consolidation is $2,765,000

anthougo

Using the information given and assuming that ABC Corporation sells the chairs it produces to XYZ Company only, the cost of goods sold is $3,150,000.

Data and Calculations:

Shareholding of ABC Corporation in XYZ = 75%

ABC production units in 20X8 = 50,000 chairs

Number of units sold to XYZ = 35,000 chairs

Cost of product per unit = $90

Thus, if ABC Corporation sells the chairs it produces to XYZ Company only, the cost of goods sold is $3,150,000 ($90 x 35,000).

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