Question

Planet Corporation acquired 90 percent of Saturn Company’s voting shares of stock in 20X1. During 20X4, Planet purchased 40,000 Playday doghouses for $32 each and sold 25,000 of them to Saturn for $40 each. Saturn sold 18,000 of the doghouses to retail establishments prior to December 31, 20X4, for $55 each. Both companies use perpetual inventory systems.

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 on account.
• 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.

PLEASE HELPPP

Answer 1

Requirement a:-

Sr no.	Particular	Debit ($)	Credit ($)
1	Inventory (40,000*32)	1,280,000
	To cash		1,280,000
	( To record the purchase of inventory)
2	Intercompany Account receivables (25,000*40)	1,000,000
	To sales		1,000,000
	( To record the sale of playday houses)
3	Cost of goods sold (25,000*32)	800,000
	To inventory		800,000
	( To record the cost of goods sold)

Requirement b :-

Sr no.	Particular	Debit ($)	Credit ($)
1	Inventory (25,000*40)	1,000,000
	To intercompany purchase from planet		1,000,000
	( To record purchase of inventory on account)
2	Account receivables (18000*55)	990,000
	To sales		990,000
	(To record sales of playday houses)
3	cost of goods sold (18000*40)	720,000
	To inventory		720,000
	( To record cost of goods sold)

Requirement c:-

Sr no	particular	Debit ($)	Credit ($)
	Sales (25000*40)	1,000,000
	To cost of goods sold [( 18000*40)+(25000-18000)*32]		944,000
	To inventory (25000-18000)*(40-32)		56000