Reference no: EM133117239

Question - Parent Corporation owns 75% of the voting common stock of Sub Corporation, acquired at book value during 20X1. Selected information from the accounts of Parent and Sub for 20X2 are as follows:

Parent Sub

Sales $1,800,000 $1,000,000

Cost of Sales 980,000 380,000

During 20X2, Parent sold merchandise to Sub for $100,000, at a gross profit to Parent of $40,000. Half of this merchandise remained in Sub's inventory at December 31, 20X2. Sub's December 31, 20X1 inventory included unrealized profit of $8,000 on goods acquired from Parent.

In a consolidated income statement for Parent Corporation and Subsidiary for the year 20X2, determine the consolidated sales?

a. $2,900,000

b. $2,800,000

c. $2,725,000

d. $2,700,000