Problem:

Several years ago, ABC bought DEF Company. DEF was a supplier of merchandise for ABC and one of the primary reasons for this acquisition was so that ABC could save money on these purchases. In the current year, ABC reports cost of goods sold of $1,000,000 while DEF reports $500,000. Half of DEF's sales were made to ABC for $300,000. As of the last day of the year, ABC still held 10 percent of these goods and planned to sell them early in the following year.

Required:

Question: What amount should ABC report as consolidated cost of goods sold?

A $1,015,000

B $1,205,000

C $1,165,000

D $1,190,000

Note: Please show how you came up with the solution.