In: Accounting
Klon Corporation owns 70 percent of Brant Company’s stock and 60
percent of Torkel Company’s stock. During 20X8, Klon sold inventory
purchased in 20X7 for $66,000 to Brant for $110,000. Brant then
sold the inventory at its cost of $110,000 to Torkel. Prior to
December 31, 20X8, Torkel sold $50,000 of inventory to a
nonaffiliate for $80,000 and held $60,000 in inventory at December
31, 20X8.
a. Prepare the journal entries recorded by Klon, Brant, and Torkel
during 20X8 relating to the intercorporate sale and resale of
inventory. (If no entry is required for a
transaction/event, select "No journal entry required" in the first
account field.)
Entries recorded by Brant Company:
Entries recorded by Torkel Company:
b. What amount should be reported in the 20X8 consolidated
income statement as cost of goods sold?
c. What amount should be reported in the December 31, 20X8,
consolidated balance sheet as inventory?
d. Prepare the consolidation entry needed at December 31, 20X8,
to remove the effects of the inventory transfers. (If no
entry is required for a transaction/event, select "No journal entry
required" in the first account field.)
please help!