Tala Co. owns an 80% interest in Kilometro Inc., acquired several years ago. Kilometro regularly sells merchandise to its parent at 125% of its cost. Gross profit data of Tala and Kilometro for the year 2018 are:

Sales

Tala-2,500,000

Kilometro-1,800,000

Cost of Sales

Tala 1,800,000

Kilometro-1,240,000

During 2018, Tala purchased inventory items from Kilometro at a transfer price of 400,000. Tala December 31, 2017 and 2018 inventories were 500,000 and 600,000 respectively, which included goods acquired from Kilometro of 125,000 and 100,000 respectively. The inventory of Kilometro at the beginning and end of 2018 were 350,000 and 400,000 respectively. As of December 31, 2018, 60% of the year's shipment is not yet paid by Tala.

1. What is the consolidated cost of sales?

2. What amount of Inventory is reported in the consolidated balance sheet at December 31, 2018?

Answer rating: 100% (QA)

Answer Tala Co owns an 80 interest in kilometero inc ... View the full answer