Question

Company A owns all of Company B’s common stock. in may 2018, A purchased 10,000 stuffed animal storage bean bag chairs for kids for $11 each and sold them to B for $20 each. For the B resold 7500 of the bean bag chairs to its retail customers for $28 each prior to the end of the 2018 fiscal year. For the B sold the remaining 2500 bean bag chairs in the spring of 2019. A and B use perpetual inventory system.

Prepare the elimination of intracompany sales consolidation entry that A would make when prepare its 2018 consolidated financial statement.

Answer 1

Please give positive ratings so I can keep answering. If you have any queries please comment. Thanks! I really need your feedback. Please upvote.

Here though B company sold stock in 2018 and 2019 but Intracompany sales will be removed in its entirety in 2018 only from cost of goods sold and closing Inventory of B and from Sales of A.
	For A
Units sold	10,000.00
Sell price	20.00
Sales value	200,000.00
	For B
Units sold	7,500.00
Cost price	20.00
Cost of goods sold	150,000.00
Closing Inventory	2,500.00
Cost price	20.00
Closing Inventory	50,000.00
Intracompany sales consolidation entry
Account	Debit ($)	Credit ($)
Sales	200,000.00
Cost of goods sold		150,000.00
Closing Inventory		50,000.00