Question

Gentry Inc. acquired 100% of Gaspard Farms on January 5, 2012. During 2012, Gentry sold Gaspard Farms for $625,000 goods which had cost $425,000. Gaspard Farms still owned 12% of the goods at the end of the year. In 2013, Gentry sold goods with a cost of $800,000 to Gaspard Farms for $1,000,000, and Gaspard Farms still owned 10% of the goods at year-end. For 2013, cost of goods sold was $5,400,000 for Gentry and $1,200,000 for Gaspard Farms. What was consolidated cost of goods sold for 2013

Answer 1

$ 5596000

Step-by-step explanation:

Please find the answer as follows:

Cost of Goods Sold (Gaspard Firm) = 5400000

+ Cost of Goods Sold (Gentry Firm) = 1200000

- Inter Firm Sales from Gentry to Gaspard = 1000000

+ Unrealized Profit on the Sales from Gentry to Gaspard = (1000000 - 800000)*10% = 20000

- Unrealized Profit on the Sales from Gaspard to Gentry = (625000 - 425000)*12% = 24000

= 5596000