ABC Company owns an 80% interest in XYZ Corporation at underlying book value. ABC's investment in XYZ Corporation is carried on cost. During 2022, XYZ Corp. sold merchandise to ABC Co. for P500,000 at a mark-up of 25%. At December 31, 2022, half of his merchandise is included in ABC's inventory. Meanwhile, included in XYZ's beginning inventory was P200,000 merchandise from inter-company sales which was made at 20% gross profit. ABC and XYZ declared dividends P300,000 and P250,000 respectively and paid 90% of the declared amount in 2022. Separate income statement for ABC and XYZ for the year ended, 2022 are summarized as follows: Sales Cost of sales Dividend revenue Net income Operating expenses (300,000) (420,000) 1,000,000 1,490,000 ABC Co. XYZ Corp. 1,522,500 P1,500,000 P2,000,000 990,000 (800,000) (1,200,000) How much is the consolidated gross profit for 2022? 200,000 140,000 P600,000 P520,000

ABC Company owns an 80% interest in XYZ Corporation at underlying book value. ABC's investment in XYZ Corporation is carried on cost. During 2022, XYZ Corp. sold merchandise to ABC Co. for P500,000 at a mark-up of 25%. At December 31, 2022, half of his merchandise is included in ABC's inventory. Meanwhile, included in XYZ's beginning inventory was P200,000 merchandise from inter-company sales which was made at 20% gross profit. ABC and XYZ declared dividends P300,000 and P250,000 respectively and paid 90% of the declared amount in 2022. Separate income statement for ABC and XYZ for the year ended, 2022 are summarized as follows: Sales Cost of sales Dividend revenue Net income Operating expenses (300,000) (420,000) 1,000,000 1,490,000 ABC Co. XYZ Corp. 1,522,500 P1,500,000 P2,000,000 990,000 (800,000) (1,200,000) How much is the consolidated gross profit for 2022? 200,000 140,000 P600,000 P520,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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