During 2022, The Blue Company sold inventory costing it $1,200,000 to its 100% owned subsidiary, Yellow Company.
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Question:
During 2022, The Blue Company sold inventory costing it $1,200,000 to its 100% owned subsidiary, Yellow Company. Blue Company marked up the inventory so that it achieved a 70% gross profits on sales.
By the end of the year (12/31/2022), Yellow Company had sold all of the inventory to an outside, independent company for $5,000,000?
Required:
1) By how much is cost of goods sold overstated on Yellow Company's books, before the elimination entry on December 31, 2022?
Related Book For
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
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