Hill Company entered into the following inventory transactions with its investees during 2018:
Sold inventory to Grant Inc. for $150,000. The inventory originally cost Hill $120,000. Grant sold 75% of the inventory during 2018. Hill owns 15% of the voting stock of Grant and does not use the equity method to account for the Grant investment. Sold inventory to Thornton Inc. for $400,000. The inventory originally cost Hill $320,000. Thornton sold all of this inventory during 2018. Hill owns 100% of the voting stock of Thornton.
Which of the following adjustments is correct with respect to preparing Hill's 2018 consolidated financial statements?
A. Cost of goods sold will be decreased $338,000.
B. Sales will be decreased $400,000.
C. Inventory will be decreased $40,000.
D. Gross profit will be decreased $110,000.
Answer: B
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Which one of the following is true when the effective-interest method of amortizing bond discount is used?
a. Interest expense as a percentage of the bonds' book value varies from period to period. b. Interest expense remains constant for each period. c. Interest expense increases each period. d. The interest rate decreases each period.
The amount of the claim of preferred stockholders in liquidation is normally equal to the market value of the preferred stock
Indicate whether the statement is true or false
In a world with no taxes, Modigliani and Miller (MM) show that a firm's capital structure does not affect its value. However, when taxes are considered, MM show a positive relationship between debt and value, i.e., the firm's value rises as it uses more and more debt, other things held constant.
Answer the following statement true (T) or false (F)
Product line length is the ________,
A) length in feet of a company's assembly line B) average length in inches of a company's best-selling product C) number of different product lines a company offers D) number of items in any given product line E) combined activities of a company