Crocs, Inc. sells Croslite footbeds to its wholly-owned subsidiaries, Ocean Minded, Inc. and Bite, Inc., for use in manufacturing their footwear. The following intercompany information is available for 2019:

Ocean Minded	Bite
Merchandise in beginning inventory purchased from Crocs	$920,000	$575,000
Merchandise in ending inventory purchased from Crocs	1,035,000	805,000
Total sales revenue recorded by Crocs	34,500,000	28,750,000
Crocs sells the footbeds to its subsidiaries at a markup of 15% on cost.

Related to the above information, calculate the following balances, reported in the trial balances of Crocs and its subsidiaries at the end of 2019:

(1) Sales revenue and cost of goods sold, reported on Crocs’ books

(2) Cost of goods sold, reported on the books of Ocean Minded and Bite.

Enter answers in thousands ($34,500,000 equals $34,500 in thousands).

Sales revenue reported on Croc's books		?
Cost of goods sold reported on Croc's books		?
Cost of goods sold reported on Ocean Minded's books		?
Cost of goods sold reported on Bite's books		?
Calculate the consolidated balances for inventory and cost of goods sold.
Enter answers in thousands ($28,750,000 equals $28,750 in thousands).
(in thousands)
Consolidated inventory		?
Consolidated cost of goods sold		?

Prepare the eliminating entries (I) required to consolidate the accounts of Crocs with those of Ocean Minded and Bite at the end of 2019.

Enter answers in thousands ($920,000 equals $920 in thousands).
Ref.	Description		Debit	Credit
(I-1)	Investment in Ocean Minded		?	?
	Cost of goods OR Inventory OR Investment in BITE OR Sales Revenue		?	?
	Cost of goods OR Inventory OR Investment in BITE OR Sales Revenue		?	?
To recognize confirmed downstream profit in beginning inventories.
(I-2)	Cost of goods OR Inventory OR Investment in BITE OR Sales Revenue		?	?
	Cost of goods OR Inventory OR Investment in BITE OR Sales Revenue		?	?
To eliminate gross intercompany sales and purchases.
(I-3)	Cost of goods OR Inventory OR Investment in BITE OR Sales Revenue		?	?
	Cost of goods OR Inventory OR Investment in BITE OR Sales Revenue		?	?
To eliminate unconfirmed profit in ending inventories.

Assume Ocean Minded reports net income of $2,000,000 and Bite reports net income of $2,500,000. There are no revaluation write-offs in 2019 or any other intercompany transactions. Calculate equity in net income of Ocean Minded and equity in net income of Bite, as reported by Crocs on its own books, using the complete equity method.

Enter answers in thousands ($34,500,000 equals $34,500 in thousands).
(in thousands)
Equity in net income of Ocean Minded		?
Equity in net income of Bite		?

Answer rating: 100% (QA)

1 a Sales Revenue reported on Crocs books 34500 28750 63250 thousands b Cost of goo... View the full answer