Question
In: Accounting
Planet Corporation acquired 90 percent of Saturn Company’s voting shares of stock in 20X1. During 20X4,...
Planet Corporation acquired 90 percent of Saturn Company’s
voting shares of stock in 20X1. During 20X4, Planet purchased
40,000 Playday doghouses for $24 each and sold 25,000 of them to
Saturn for $30 each. Saturn sold 18,000 of the doghouses to retail
establishments prior to December 31, 20X4, for $45 each. Both
companies use perpetual inventory systems.
Required:
a. Prepare all journal entries Planet recorded for the purchase of
inventory and resale to Saturn Company in 20X4. (If no
entry is required for a transaction/event, select "No journal entry
required" in the first account field.)
Record the purchase of inventory.
Record the sales of the Playday doghouses.
Record the cost of goods sold.
b. Prepare the journal entries Saturn recorded for the purchase of inventory and resale to retail establishments in 20X4. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Record the purchase of inventory.
Record the sales of the Playday doghouses.
Record the cost of goods sold.
c. Prepare the worksheet consolidation entry(ies) needed in preparing consolidated financial statements for 20X4 to remove the effects of the intercompany sale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Record the consolidation entry.
Solutions
Expert Solution
Answer:-
| a. Journal entries recorded by Planet Corporation: | Debit | Credit |
| Inventory | $ 960,000 | |
| Cash (Accounts Payable) | $ 960,000 | |
| Cash (Accounts Receivable) | $ 750,000 | |
| Sales | $ 750,000 | |
| Cost of Goods Sold | $ 600,000 | |
| Inventory | $ 600,000 | |
| b. Journal entries recorded by Saturn Corporation: | Debit | Credit |
| Inventory | $ 750,000 | |
| Cash (Accounts Payable) | $ 750,000 | |
| Cash (Accounts Receivable) | $ 1,125,000 | |
| Sales | $ 1,125,000 | |
| Cost of Goods Sold | $ 750,000 | |
| Inventory | $ 750,000 | |
| c. Eliminating entry: | ||
| Sales | $ 750,000 | |
| Cost of Goods Sold | $ 750,000 |
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ekkarill92 answered 1 hour agoRelated Solutions
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