Hi all,
Sadly this is my 4th time studying the FAR exam. I scored a 74 last quarter. With that being said, could anyone help me with the below question from NINJA about consolidations?
Selected information for two unconsolidated subsidiaries of Ray Company taken from their pre-closing trial balances at December 31 is as follows:
Ash company Dr.(Cr.) Bix company Dr.(Cr.)
Inventory, 1/1 $120,000 ———
Purchases $190,000 $85,000
Shipments to Bix $(80,000) ———
Shipments from Ash ———- $100,000
Unrealized intercompany
inventory profit $(20,000) ———
Additional data relating to the inventory at December 31 are as follows:
Ash : Bix:
Inventory acquired from outside parties $125,000 $25,000
Bix inventory acquired from Ash ——— $30,000
At December 31, the inventory reported on the combined balance sheet of the two unconsolidated subsidiaries should be
A. $150,000
B. $160,000
C. $174,000
D. $180,000
The answer is C. I am just confused why you would not take into account the 190,000 of purchases that Ash had and the 85,000 that Bix had?
