On January 1, Year 2, PAT Ltd. acquired 90% of SAT Inc. when SAT's retained earnings were $940,000. There was no acquisition differential. PAT accounts for its investment under the cost method. SAT sells inventory to PAT on a regular basis at a markup of 30% of selling price. The intercompany sales were $80,000 in Year 2 and $110,000 in Year 3. The total amount owing by PAT related to these intercompany sales was $30,000 at the end of Year 2 and $20,000 at the end of Year 3. On January 1, Year 3, the inventory of PAT contained goods purchased from SAT amounting to $30,000, while the December 31, Year 3, inventory contained goods purchased from SAT amounting to $40,000. Both companies pay income tax at the rate of 40%. Selected account balances from the records of PAT and SAT for the year ended December 31, Year 3, were as follows: Inventory Accounts payable Retained earnings, beginning of year Sales Cost of sales Income tax expense $ Inventory Accounts payable Retained earnings, beginning of year Sales Cost of sales Income tax expense PAT 40,000 640,000 2,440,000 4,040,000 3,140,000 120,000 $ Required: (a) Determine the amount to report on the Year 3 consolidated financial statements for the selected accounts noted above. (Input all amounts as positive values. Omit $ sign in your response.) $ SAT 340,000 360,000 1,140,000 2,540,000 1,740,000 90,000
On January 1, Year 2, PAT Ltd. acquired 90% of SAT Inc. when SAT's retained earnings were $940,000. There was no acquisition differential. PAT accounts for its investment under the cost method. SAT sells inventory to PAT on a regular basis at a markup of 30% of selling price. The intercompany sales were $80,000 in Year 2 and $110,000 in Year 3. The total amount owing by PAT related to these intercompany sales was $30,000 at the end of Year 2 and $20,000 at the end of Year 3. On January 1, Year 3, the inventory of PAT contained goods purchased from SAT amounting to $30,000, while the December 31, Year 3, inventory contained goods purchased from SAT amounting to $40,000. Both companies pay income tax at the rate of 40%. Selected account balances from the records of PAT and SAT for the year ended December 31, Year 3, were as follows: Inventory Accounts payable Retained earnings, beginning of year Sales Cost of sales Income tax expense $ Inventory Accounts payable Retained earnings, beginning of year Sales Cost of sales Income tax expense PAT 40,000 640,000 2,440,000 4,040,000 3,140,000 120,000 $ Required: (a) Determine the amount to report on the Year 3 consolidated financial statements for the selected accounts noted above. (Input all amounts as positive values. Omit $ sign in your response.) $ SAT 340,000 360,000 1,140,000 2,540,000 1,740,000 90,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Alert for not submit AI generated answer. I need unique and correct answer. Don't try to copy from anywhere. Do not give answer in image formet and hand writing
Transcribed Image Text:On January 1, Year 2, PAT Ltd. acquired 90% of SAT Inc. when SAT's retained earnings were $940,000. There was no acquisition
differential. PAT accounts for its investment under the cost method. SAT sells inventory to PAT on a regular basis at a markup of 30% of
selling price. The intercompany sales were $80,000 in Year 2 and $110,000 in Year 3. The total amount owing by PAT related to these
intercompany sales was $30,000 at the end of Year 2 and $20,000 at the end of Year 3. On January 1, Year 3, the inventory of PAT
contained goods purchased from SAT amounting to $30,000, while the December 31, Year 3, inventory contained goods purchased
from SAT amounting to $40,000. Both companies pay income tax at the rate of 40%.
Selected account balances from the records of PAT and SAT for the year ended December 31, Year 3, were as follows:
SAT
340,000
360,000
1,140,000
2,540,000
1,740,000
90,000
Inventory
Accounts payable
Retained earnings, beginning of year
Sales
Cost of sales
Income tax expense
Inventory
Accounts payable
Retained earnings, beginning of year
$
Sales
Cost of sales
Income tax expense
PAT
40,000
640,000
2,440,000
4,040,000
3,140,000
120,000
Required:
(a) Determine the amount to report on the Year 3 consolidated financial statements for the selected accounts noted above. (Input all
amounts as positive values. Omit $ sign in your response.)
$
$
(b) This part of the question is not part of your Connect assignment.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 7 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education