Pink Corporation owns 80 percent of Sink Company's voting shares. During 20X4, Pink produced 60,000 smart phones at a cost of $62 each and sold 45,000 smart phones to Sink for $93 each. Sink sold 26,000 of the smart phones to unaffiliated companies for $128 each prior to December 31, 20X4, and sold the remainder in early 20X5 to unaffiliated companies for $133 each. Both companies use the perpetual inventory systems.Based on the information given above, what amount of cost of goods must be eliminated from the consolidated income statement for 20X4?
A. $3,379,000
B. $806,000
C. $589,000
D. $3,596,000
Answer: D
Business
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