Question

Item7 4 points eBookPrintReferencesCheck my workCheck My Work button is now enabledItem 7 Planner Corporation owns 60 percent of Schedule Company’s voting shares. During 20X3, Planner produced 25,000 computer desks at a cost of $82 each and sold 10,000 of them to Schedule for $94 each. Schedule sold 7,000 of the desks to unaffiliated companies for $130 each prior to December 31, 20X3, and sold the remainder in early 20X4 for $140 each. Both companies use perpetual inventory systems. Required: a. What amounts of cost of goods sold did Planner and Schedule record in 20X3? b. What amount of cost of goods sold must be reported in the consolidated income statement for 20X3? (Do not round intermediate calculations.)

Answer 1

Planner Corporation and Schedule Company

The cost of goods sold in 20X3:

Planner Schedule

Corporation Company Consolidated

Cost of goods sold $820,000 $658,000 $574,000

Step-by-step explanation:

a) Data and Calculations:

Planner Corporation:

Cost of Goods Sold:

Cost of production = $2,050,000 (25,000 * $82)

Cost of goods sold = $820,000 (10,000 * $82)

Schedule Company:

Cost of goods sold = $658,000 (7,000 * $94)

Consolidated income statement:

Cost of goods sold = $574,000 (7,000 * $82)