Multiple-Choice Questions?Consolidated Balances
Select the correct answer for each of the following questions.
Lorn Corporation purchased inventory from Dresser Corporation for $120,000 on September 20, 20X1, and resold 80 percent of the inventory to unaffiliated companies prior to December 31, 20X1, for $140,000. Dresser produced the inventory sold to Lorn for $75,000. Lorn owns 70 percent of Dresser’s voting common stock. The companies had no other transactions during 20X1.
1. What amount of sales will be reported in the 20X1 consolidated income statement?
a. $98,000.
b. $120,000.
c. $140,000.
d. $260,000.
2. What amount of cost of goods sold will be reported in the 20X1 consolidated income statement?
a. $60,000.
b. $75,000.
c. $96,000.
d. $120,000.
e. $171,000.
3. What amount of consolidated net income will be assigned to the controlling interest for 20X1?
a. $20,000.
b. $30,800.
c. $44,000.
d. $45,000.
e. $69,200.
f. $80,000.
4. What inventory balance will be reported by the consolidated entity on December 31, 20X1?
a. $15,000.
b. $16,800.
c. $24,000.
d. $39,000.
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