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VashaNatasha [74]
3 years ago
13

Ketchem Corp., a cash basis taxpayer, and Catcham Corp., an accrual basis taxpayer, are parent-subsidiary corporations. In Janua

ry-November of year 1, Ketchem sold $50,000 of supplies to Catcham, which Catcham paid for on a 1/20 net 30 basis, always paying on Day 20. On December 27 of year 1, Ketchem 's December sale of supplies to Catcham, Ketchem 's taxable income is $600,000 and Catcham's is $120,000. How much taxable income should Ketchem and Catcham report on the year 1 consolidated tax return?
a. $720,000
b. $770,000
c. $74,000
d. $710,000
Business
1 answer:
Softa [21]3 years ago
7 0

Answer: B. $770,000

Explanation:

The taxable income that they would report on the consolidate tax return would be $770,000 ($600,000 + $120,000 + $50,000)

The reason why we have added $50,000 is because the Ketchem sold $50,000 worth of supplies to Catcham and Catcham were able to pay that amount within 20 days. That is in the month of November.

Also, the consolidated report is to be made after December 27, therefore, we will include this transaction as it was before 27th December.

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Answer:

Common stock and $100

Explanation:

The journal entry is shown below:

Cash Dr $500   (100 shares × $5)

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3 years ago
Data related to the inventories of Costco Medical Supply are presented below: Surgical Surgical Rehab Rehab Equipment Supplies E
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Answer:

$85

Explanation:

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Selling price     $260                  $100           $340               $165

Cost                  $170                     $90           $250              $162

Costs to sell     $30                      $15              $25                 $10

If we apply the net realizable value rule, the value of surgical supplies would be:

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