Find Corp. is a joint operation in which Seek Inc. has a 20% interest. Seek reports its investment in Find using proportionately adjusted financial statements. A contractual agreement gives Seek proportionate rights (20%) to all of Finds' assets and proportionate responsibilities (20%) for all of Find's liabilities. Seek uses the equity method to record its investment but has yet to make any journal entries related to its investment in Find for 2020. The financial statements of both companies as at December 31, 2020, are shown below. Seek Inc. Find Corp. INCOME STATEMENTS Sales $ 800 , 000 $ 200 , 000 Cost of Sales $ 400 , 000 $ 100 , 000 Other Expenses $ 200 , 000 $ 60 , 000 Net Income $ 200 , 000 $ 40 , 000 BALANCE SHEETS Miscellaneous Assets $ 600 , 000 $ 300 , 000 Inventory $ 120 , 000 $ 60 , 000 Investment in Find $ 180 , 000 Total Assets $ 900 , 000 $ 360 , 000 Miscellaneous Liabilities $ 160 , 000 $ 80 , 000 Common Shares $ 200 , 000 $ 100 , 000 Retained Earnings, Jan 1 $ 340 , 000 $ 140 , 000 Net Income $ 200 , 000 $ 40 , 000 Total Liabilities & Equity $ 900 , 000 $ 360 , 000 \begin{array}{|l|r|r|}\hline & ext { Seek Inc. } & ext { Find Corp. } \\hline ext { INCOME STATEMENTS } & & \\hline ext { Sales } & \$ 800,000 & \$ 200,000 \\hline ext { Cost of Sales } & \$ 400,000 & \$ 100,000 \\hline ext { Other Expenses } & \$ 200,000 & \$ 60,000 \\hline ext { Net Income } & \$ 200,000 & \$ 40,000 \\hline ext { BALANCE SHEETS } & & \\hline ext { Miscellaneous Assets } & \$ 600,000 & \$ 300,000 \\hline ext { Inventory } & \$ 120,000 & \$ 60,000 \\hline ext { Investment in Find } & \$ 180,000 & \\hline ext { Total Assets } & \$ 900,000 & \$ \mathbf{3 6 0 , 0 0 0} \\hline ext { Miscellaneous Liabilities } & \$ 160,000 & \$ 80,000 \\hline ext { Common Shares } & \$ 200,000 & \$ 100,000 \\hline ext { Retained Earnings, Jan 1 } & \$ 340,000 & \$ 140,000 \\hline ext { Net Income } & \$ 200,000 & \$ 40,000 \\hline ext { Total Liabilities \ & Equity } & \$ 900,000 & \$ 360,000 \\hline\end{array} INCOME STATEMENTS Sales Cost of Sales Other Expenses Net Income BALANCE SHEETS Miscellaneous Assets Inventory Investment in Find Total Assets Miscellaneous Liabilities Common Shares Retained Earnings, Jan 1 Net Income Total Liabilities & Equity Seek Inc. $800 , 000 $400 , 000 $200 , 000 $200 , 000 $600 , 000 $120 , 000 $180 , 000 $900 , 000 $160 , 000 $200 , 000 $340 , 000 $200 , 000 $900 , 000 Find Corp. $200 , 000 $100 , 000 $60 , 000 $40 , 000 $300 , 000 $60 , 000 $ 360 , 000 $80 , 000 $100 , 000 $140 , 000 $40 , 000 $360 , 000 During 2020, Seek sold merchandise totaling $120,000 to Find and recorded a gross profit of 50% on these sales. At the end of 2020, Find's inventory contained $30,000 worth of merchandise purchased from Seek. Find also owed $50,000 to Seek at the end of 2020.Both companies are subject to a 40% tax rate.What is the total amount of sales that would appear on Seek's Proportionately Adjusted Income Statement?A) $816,000B) $880,000C) $920,000D) $1,000,000

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Find Corp. is a joint operation in which Seek Inc. has a 20% interest. Seek reports its investment in Find using proportionately adjusted financial statements. A contractual agreement gives Seek proportionate rights (20%)  to all of Finds' assets and proportionate responsibilities (20%)  for all of Find's liabilities. Seek uses the equity method to record its investment but has yet to make any journal entries related to its investment in Find for 2020. The financial statements of both companies as at December 31, 2020, are shown below.  Seek Inc.   Find Corp.   INCOME STATEMENTS   Sales  $ 800 , 000 $ 200 , 000  Cost of Sales  $ 400 , 000 $ 100 , 000  Other Expenses  $ 200 , 000 $ 60 , 000  Net Income  $ 200 , 000 $ 40 , 000  BALANCE SHEETS   Miscellaneous Assets  $ 600 , 000 $ 300 , 000  Inventory  $ 120 , 000 $ 60 , 000  Investment in Find  $ 180 , 000  Total Assets  $ 900 , 000 $ 360 , 000  Miscellaneous Liabilities  $ 160 , 000 $ 80 , 000  Common Shares  $ 200 , 000 $ 100 , 000  Retained Earnings, Jan 1  $ 340 , 000 $ 140 , 000  Net Income  $ 200 , 000 $ 40 , 000  Total Liabilities  &  Equity  $ 900 , 000 $ 360 , 000 \begin{array}{|l|r|r|}\hline  &  	ext { Seek Inc. }  &  	ext { Find Corp. } \\hline 	ext { INCOME STATEMENTS }  &   &  \\hline 	ext { Sales }  &  \$ 800,000  &  \$ 200,000 \\hline 	ext { Cost of Sales }  &  \$ 400,000  &  \$ 100,000 \\hline 	ext { Other Expenses }  &  \$ 200,000  &  \$ 60,000 \\hline 	ext { Net Income }  &  \$ 200,000  &  \$ 40,000 \\hline 	ext { BALANCE SHEETS }  &   &  \\hline 	ext { Miscellaneous Assets }  &  \$ 600,000  &  \$ 300,000 \\hline 	ext { Inventory }  &  \$ 120,000  &  \$ 60,000 \\hline 	ext { Investment in Find }  &  \$ 180,000  &  \\hline 	ext { Total Assets }  &  \$ 900,000  &  \$ \mathbf{3 6 0 , 0 0 0} \\hline 	ext { Miscellaneous Liabilities }  &  \$ 160,000  &  \$ 80,000 \\hline 	ext { Common Shares }  &  \$ 200,000  &  \$ 100,000 \\hline 	ext { Retained Earnings, Jan 1 }  &  \$ 340,000  &  \$ 140,000 \\hline 	ext { Net Income }  &  \$ 200,000  &  \$ 40,000 \\hline 	ext { Total Liabilities \ &  Equity }  &  \$ 900,000  &  \$ 360,000 \\hline\end{array}  INCOME STATEMENTS   Sales   Cost of Sales   Other Expenses   Net Income   BALANCE SHEETS   Miscellaneous Assets   Inventory   Investment in Find   Total Assets   Miscellaneous Liabilities   Common Shares   Retained Earnings, Jan 1   Net Income   Total Liabilities  &  Equity  ​  Seek Inc.  $800 , 000 $400 , 000 $200 , 000 $200 , 000 $600 , 000 $120 , 000 $180 , 000 $900 , 000 $160 , 000 $200 , 000 $340 , 000 $200 , 000 $900 , 000 ​  Find Corp.  $200 , 000 $100 , 000 $60 , 000 $40 , 000 $300 , 000 $60 , 000 $ 360 , 000 $80 , 000 $100 , 000 $140 , 000 $40 , 000 $360 , 000 ​ ​   During 2020, Seek sold merchandise totaling $120,000 to Find and recorded a gross profit of 50% on these sales. At the end of 2020, Find's inventory contained $30,000 worth of merchandise purchased from Seek. Find also owed $50,000 to Seek at the end of 2020.Both companies are subject to a 40% tax rate.What is the total amount of sales that would appear on Seek's Proportionately Adjusted Income Statement?A)  $816,000B)  $880,000C)  $920,000D)  $1,000,000

Fatin Najwa Ramli · Accepted Answer

Final Answer : A, Explanation :  Seek's proportionately adjusted sales include its own sales plus 20% of Find's sales. Seek's sales are $800,000. Find's sales are $200,000, of which 20% is $40,000. Therefore, the total adjusted sales are $800,000 + $40,000 = $840,000. However, the correct answer is not listed, indicating a possible mistake in the question or answer choices. Given the options, A) $816,000 is the closest to the correct calculation based on the provided information, but it does not accurately reflect the calculation described.

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