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A parent provides marketing services to its subsidiary during 2017. The parent charged the subsidiary $500,000...

A parent provides marketing services to its subsidiary during 2017. The parent charged the subsidiary $500,000 for the services. The services cost the parent $400,000 (paid in cash). The companies use service revenue and service expense, as appropriate, to record this transaction and all intercompany charges were still unpaid as of the end of the year. Provide the 2017 entries needed to record both the original transactions and the eliminations necessary for consolidation. Provide entries for Parent, Subsidiary, and the Consolidation worksheet.

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Expert Solution

Parent books
Subsidiary A/c Dr               500,000
Service revenue Cr.                                          500,000
Subsidiary books
Marketing Expense Dr.               500,000
Parent A/c Cr.                                          500,000
Elimination entry
Service revenue Dr.               500,000
Marketing Expense Cr.                                          500,000
Parent a/c Dr.               500,000
Subsidiary A/c Cr.                                          500,000

ekkarill92 answered 1 year ago
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