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31 July, 03:12

Brendon, Inc. acquired 100% of Weston Enterprises on January 2, 2020. During 2020, Brendon sold Weston for $700,000 goods which had cost $500,000. Weston still owned 40% of the goods at the end of the year. In 2021, Brendon sold goods with a cost of $500,000 to Weston for $700,000, and the buyer still owned 40% of the goods at year-end. For 2021, cost of goods sold was $1,000,000 for Brendon and $990,000 for Weston. What was consolidated cost of goods sold for 2021? a. $1,370,000b. $1,290,000c. $1,870,000d. $1,990,000

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  1. 31 July, 03:20
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    Our answer is B $1,290,000

    Explanation:

    Working:

    Cost of Goods Sold (Weston Firm) = 990,000

    Cost of Goods Sold (Brendon Firm) = 1,000,000

    - Inter Firm Sales from Brendon to Weston = 700,000

    + Unrealized Profit on the Sales from Brendon toWeston = (700000 - 500000) * 40% = 80000

    - Unrealized Profit on the Sales from Weston to Brendon = (700000 - 500000) * 40% = 80000

    $1,290,000
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