Included in the amounts for Pot's sales were Pot's sales for merchandise to Skillet for $140,000.There were no sales from Skillet to Pot.Intra-entity transfers had the same markup as sales to outsiders.Skillet had resold all of the intra-entity transfers (purchases) from Pot to outside parties during 2018.What are consolidated sales and cost of goods sold for 2018?
A) $1,400,000 and $952,000.
B) $1,400,000 and $1,092,000.
C) $1,540,000 and $952,000.
D) $1,400,000 and $1,232,000.
E) $1,540,000 and $1,092,000.

Question

Quizplus · Accepted Answer

The intra-entity sales of $140,000 should be eliminated from the consolidated sales, resulting in $1,400,000. Since Skillet resold all the intra-entity purchases, the cost of goods sold remains unaffected by the intra-entity markup, resulting in $952,000.

Included in the Amounts for Pot's Sales Were Pot's Sales