Reference no: EM131921071

Question - Pelga Company routinely receives goods from its 80%-owned subsidiary, Swede Corporation. In 2014, Swede sold merchandise that cost $80,000 to Pelga for $100,000. Half of this merchandise remained in Pelga's December 31, 2014 inventory. This inventory was sold in 2015. During 2015, Swede sold merchandise that cost $160,000 to Pelga for $200,000. $62,500 of the 2015 merchandise inventory remained in Pelga's December 31, 2015 inventory. Selected income statement information for the two affiliates for the year 2015 was as follows:

Pelga 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 Pelga and Subsidiary for 2015 were

A) $512,000.

B) $526,000.

C) $522,500.

D) $528,000.