Part II t the beginning of 2014 Peri Co. created a wholly owned subsidiary, Sper
ID: 2541385 • Letter: P
Question
Part II
t the beginning of 2014 Peri Co. created a wholly owned subsidiary, Speri Co., to handle the marketing and sales of its products. During 2014 Peri manufactured goods for a total cost of $1,000,000. It sold 80% of these items to Speri for $1,200,000. Speri sold 75% of what it purchased from Peri to customers for $1,500,000. (Peri only sold to Speri and Speri only purchased from Peri.) In the 2014 annual consolidated financial statements for Peri and Speri, what should be reported for each of the following:
A. Total Consolidated Sales Revenue for 2014
B. Total Consolidated Cost of Goods Sold for 2014
C. Consolidated Ending Inventory for December 31, 2014
Explanation / Answer
Consolidated sales 15000000
cogs 600000
Ending inventory 400000
Only 75% of 80% of original sales is made outside the group.
Which is effectively 60% of cost of material produced.