(Answered) Question - upstream sales norsk company routinely purchases

Accounting

Question - Upstream sales: Norsk Company routinely purchases goods from its 80%-owned subsidiary, Swede Corporation. In 2016, Swede sold merchandise that cost $80,000 to Norsk for $100,000. Half of this merchandise remained in Norsk's December 31, 2016 inventory. This inventory was sold in 2017. During 2017, Swede sold merchandise that cost $160,000 to Norsk for $200,000. $62,500 of the 2017 merchandise inventory remained in Norsk's December 31, 2017 inventory. Selected income statement information for the two affiliates for the year 2017 was as follows:

	Norsk	Swede
Sales Revenue	$500,000	$400,000
Cost of Goods Sold	400,000	320,000
Gross profit	$100,000	$80,000

Consolidated cost of goods sold for Norsk and Subsidiary for 2017 were:

A. $512,000

B. $526,000

C. $522,500

D. $528,000

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