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tankabanditka [31]
2 years ago
15

Colbert Inc. acquired 100% of Stewart Manufacturing on January 2, 2020. During 2020, Colbert sold Stewart $640,000 of goods, whi

ch had cost $450,000. Stewart still owned 18% of the goods at the end of the year. In 2021, Colbert sold goods with a cost of $820,000 to Stewart for $1,000,000, and Stewart still owned 15% of the goods at year-end. For 2021, the cost of goods sold totaled $5,800,000 for Colbert, and $1,300,000 for Stewart. What was consolidated cost of goods sold for 2021
Business
1 answer:
scoray [572]2 years ago
6 0

Based on the information given the consolidated cost of goods sold for 2021 is $6,092,800.

First step is to calculate 2021 Intra-Entity Gross Profit

2021 Intra-Entity Gross Profit= ($1,000,000 − $820,000) ×15%

2021 Intra-Entity Gross Profit= $180,000 ×  15%

2021 Intra-Entity Gross Profit= $27,000

Second step is to calculate 2020 Intra-Entity Gross Profit

2020 Intra-Entity Gross Profit= ($640,000 − $450,000) ×18%

2020 Intra-Entity Gross Profit=$190,000 ×18%

2020 Intra-Entity Gross Profit = $34,200

Third step is to calculate consolidated cost of goods sold for 2021 using this formula

Consolidated COGS = Parent's COGS  + Subsidiary's COGS− Total COGS in Intra-Entity Transfer − Intra-Entity Gross Profit Deferred from 2020 + Intra-Entity Gross Profit Deferred from 2021

Let plug in the formula

Consolidated COGS =$5,800,000+ $1,300,000- $1,000,000-$34,200 +$27,000

Consolidated COGS = $6,092,800

Inconclusion the consolidated cost of goods sold for 2021 is $6,092,800.

Learn more here: brainly.com/question/14775785

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