Question

Pepper Corporation owns 75 percent of Salt Company's voting shares. During 20X8, Pepper produced 50,000 chairs at a cost of $79 each and sold 35,000 chairs to Salt for $90 each. Salt sold 18,000 of the chairs to unaffiliated companies for $117 each prior to December 31, 20X8, and sold the remainder in early 20X9 to unaffiliated companies for $130 each. Both companies use perpetual inventory systems. Based on the information given above, what amount of cost of goods sold did Pepper record in 20X8?
A. $2,765,000

B. $1,620,000

C. $2,963,000

D. $1,422,000

Answer 1

Answer:

A. $2,765,000

Explanation:

Data provided

Number of chairs sold = 35,000

Cost per chair = $79

The computation of cost of goods sold of Pepper is shown below:-

Cost of goods sold = Number of chairs sold × Cost per chair

= 35,000 × $79

= $2,765,000

Therefore for computing the amount of cost of goods sold of pepper we simply multiply the number of chairs sold with cost per chair