Working backward from data that has eliminated intercompany transactions. Alpha owns 100% of Omega and consolidates Omega in an entity called Alpha/Omega. Beginning in 2008, Alpha sold merchandise to Omega at a price 50% larger than Alpha’s costs. Omega sold some, but not all, of these goods to customers at a further markup. Excerpts from the single company statements of Alpha and Omega and from the consolidated financial statements of Alpha/Omega appear next.
|
Single Company Statements |
|||
|
Alpha |
Omega |
Consolidated Financial Statements |
|
|
Sales Revenue |
$450,000 |
$250,000 |
$620,000 |
|
Cost of Goods Sold |
300,000 |
210,000 |
430,000 |
|
Merchandise Inventory |
60,000 |
50,000 |
100,000 |
a. What was the total sales price at which Alpha sold goods to Omega during 2008?
b. What was Omega’s cost of the goods it had purchased from Alpha but has not yet sold by the end of 2008? What was Alpha’s cost of those goods? Which of those two numbers appears in the total Merchandise Inventory on the consolidated balance sheet?