Medina Corporation has operations in two locations—a main plant and a branch plant.

The
branch receives most of its inventory from the main plant, but it also purchases some items from
local sup- pliers. The main plant transfers merchandise to the branch at 120% of cost, and this
merchandise is inventoried by the branch at billed prices. The following data for the year 2003 are
available:
Main Branch
Plant Plant
Book Books
s
Inventory January 1 $ 126,000 $ 24,000
Purchases 1,400,000 48,000
Shipments to branch 300,000
Shipments from home office 360,000
Inventory December 31 120,000 26,000
One-fourth of the beginning branch inventory was acquired from outside suppliers. The branch
ending inventory includes $5,000 from outside suppliers.

REQUIRED: Determine the cost of goods sold amount to be included in the published income
statement of Medina Corporation for the year 2003.

Main Plant Branch

Books Plant
Books

Inventory January 1 $ 126,000 $ 24,000

Purchases 1,400,000 48,000

Shipments to branch (300,000) -

Shipments from home office - 360,000

Goods available for sale 1,226,000 432,000

Inventory December 31 (120,000) (26,000)

Cost of sales 1,106,000 396,000