Jacoby Co. owned a controlling interest in Trimble Inc. Jacoby reported sales of $510,000 during 2021 while Trimble reported $300,000. Inventory costing $27,000 was transferred from Trimble to Jacoby (upstream) during the year for $54,000. Of this amount, 30% was still in ending inventory at year's end. Total receivables on the consolidated balance sheet were $115,000 at the first of the year and $158,000 at year-end. No intra-entity debt existed at the beginning or ending of the year. Using the direct approach, what is the consolidated amount of cash collected by the business from its customers?
A) $688,500.
B) $713,000.
C) $799,000.
D) $810,000.
E) $907,000.

Question

Quizplus · Accepted Answer

The consolidated sales are $510,000 (Jacoby) + $300,000 (Trimble) = $810,000. The intra-entity sales of $54,000 are eliminated, so consolidated sales are $810,000 - $54,000 = $756,000. The change in receivables is $158,000 - $115,000 = $43,000. Cash collected is $756,000 - $43,000 = $713,000.

Jacoby Co Owned a Controlling Interest in Trimble Inc