Top Company holds 90 percent of Bottom Company’s common stock. In the current year, Top reports sales of $800,000 and cost of goods sold of $600,000. For this same period, Bottom has sales of $300,000 and cost of goods sold of $180,000. During the current year, Top sold merchandise to Bottom for $100,000. The subsidiary still possesses 40 percent of this inventory at the current year-end. Top had established the transfer price based on its normal markup. What are the consolidated sales and cost of goods sold?
a. $1,000,000 and $690,000.
b. $1,000,000 and $705,000.
c. $1,000,000 and $740,000.
d. $970,000 and $696,000.
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