Question - Upstream sales: Norsk Company routinely purchases goods from its 80%-owned subsidiary, Swede Corporation. In 2016, Swede sold merchandise that cost $80,000 to Norsk for $100,000. Half of this merchandise remained in Norsk's December 31, 2016 inventory. This inventory was sold in 2017. During 2017, Swede sold merchandise that cost $160,000 to Norsk for $200,000. $62,500 of the 2017 merchandise inventory remained in Norsk's December 31, 2017 inventory. Selected income statement information for the two affiliates for the year 2017 was as follows:
|
|
Norsk
|
Swede
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|
Sales Revenue
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$500,000
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$400,000
|
|
Cost of Goods Sold
|
400,000
|
320,000
|
|
Gross profit
|
$100,000
|
$80,000
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Consolidated cost of goods sold for Norsk and Subsidiary for 2017 were:
A. $512,000
B. $526,000
C. $522,500
D. $528,000