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Parker Corporation owns 80 percent of Smith Inc
Parker Corporation owns 80 percent of Smith Inc.’s common stock. During 2011, Parker sold inventory to Smith for $250,000 on the same terms as sales made to third parties. Smith sold all of the inventory purchased from Parker in 2011. The following information pertains to Smith’s and Parker’s sales for 2011:
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Parker |
Smith |
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Sales |
$ |
1,000,000 |
|
$ |
700,000 |
|
|
Cost of Sales |
|
(400,000 |
) |
|
(350,000 |
) |
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|
|
Gross Profit |
$ |
600,000 |
|
$ |
350,000 |
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What amount should Parker report as cost of sales in its 2011 consolidated income statement? |
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