Bates Ltd. owns 60% of the outstanding common shares of Sam Ltd. During 20X6, sales from Sam to Bates were $200,000. Merchandise was priced to provide Sam with a gross margin of 20%. Bates's inventories contained $40,000 at December 31, 20X5, and $15,000 at December 31, 20X6, of merchandise purchased from Sam. Cost of goods sold for Bates and Sam for 20X6 on their separate-entity income statements were as follows:
                                                      Bates              Sam
  Beginning inventory           $ 100,000      $ 50,000
    Purchases                              700,000        200,000
    Ending inventory                 (110,000)       (55,000)
    Cost of goods sold            $ 690,000      $ 195,000
 
What is the balance of the consolidated inventory account at December 31, 20X6?
A) $160,000
B) $162,000
C) $165,000
D) $168,000


What is cost of sales on the consolidated statement of income for 20X6?
A) $687,000
B) $680,000
C) $685,600
D) $84500