Paulsen Corp acquired 70% of the voting common stock of Shipley Stores at book value equal to fair value several years ago. Paulsen manufactures home furnishings which are sold at a standard markup to department stores, as well as to its own outlet shop, Shipley Outlet Stores. Separate incomes of Paulsen and Shipley for 2013 are follows: Paulsen Shipley Sales $ 800,000 $ 500,000 Cost of Sales $ 500,000 $ 300,000 Gross Profit $ 300,000 $ 200,000 Intercompany sales from Paulsen to Shipley for 2012 and 2013 are summarized as follows: Selling Price Unsold at year-end $375,000 40% 50% Cost Intercompany sales 2012 $ 300,000 Intercompany sales 2013 $ 200,000 $250,000

Paulsen Corp acquired 70% of the voting common stock of Shipley Stores at book value equal to fair value several years ago. Paulsen manufactures home furnishings which are sold at a standard markup to department stores, as well as to its own outlet shop, Shipley Outlet Stores. Separate incomes of Paulsen and Shipley for 2013 are follows: Paulsen Shipley Sales $ 800,000 $ 500,000 Cost of Sales $ 500,000 $ 300,000 Gross Profit $ 300,000 $ 200,000 Intercompany sales from Paulsen to Shipley for 2012 and 2013 are summarized as follows: Selling Price Unsold at year-end $375,000 40% 50% Cost Intercompany sales 2012 $ 300,000 Intercompany sales 2013 $ 200,000 $250,000

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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