Question

em #2 (15 points) a. Parrish has a wholly-ownes 2017, the followine inend subsidiany, Sultan. The accounting year ends December 31 year were $65,000, the retail value of downstream on cost; merchandise, service and financing transactions occur the of uestream sales for the Sultan sells to Parrish at a markup of 35% b. Total retal To Parrish sells to Sultan at amarkup of 30% on on aies price. Upstream sales of $13,500 remain in Parrish' ending inventory. . ownstream sales of $6,000 remain in Sultan's ending inventory c. Parrish provided billed at $2,000, and costing Parrish administrative support services to Sultan, $,00 At the end of 2017, Sultan still owed Parrish $100 for services provided. services to Parrish. During 2017, Sultan billed Parrish $4,500 for These services cost Sultan $3,200. At the end of 2017, Parrish still owed services provided Sultan $250 for services provided Parrish loaned Sultan e. $20,000 on July 1, 2017, at an annual interest rate of 4% interest is pad yearly on June 30 f. Sultan sold land to Parrish in a previous year at a gain of $45,000. Parrish sold the land to an outside company in 2017 uired A. Calculate the

Answer 1

The problem A is focused on Part b of the question

Upstream sales would be sales made by Sultan to Parrish

Downstream sales would be sales made by Parrish to Sultan

We have to calculate unconfirmed profit in inventory for both companies

Paarish

Inventory from downstream sales is $6000. Hence, out of total sales by Parrish, Sultan still has $6000 in the inventory. Parrish sells to sultan at 35% markup on cost. Therefore, the cost price of those goods held in inventory would be:

$6000 * 35/135 = $1,555

Sultan

Inventory from Upstream sales is $13500. Hence, out of total sales by Parrish, Sultan still has $13500 in the inventory. Parrish sells to sultan at 30% markup on Sales. Therefore, the cost price of those goods held in inventory would be:

$13500 * 30/100 = $4,050