In: Accounting
Violet Ltd owns all the share capital of Indigo Ltd. The
following transactions are independent:
Indigo...
Violet Ltd owns all the share capital of Indigo Ltd. The
following transactions are independent:
- Indigo Ltd gives $55 000 as an interest-free loan to
Violet Ltd on 1 July 2019. Violet Ltd made a $20 000 repayment by
30 June 2020.
- Indigo Ltd rented a spare warehouse to Violet Ltd
starting from 1 July 2019 for 1 year. The total charge for the
rental was $3 500, and Violet Ltd paid half of this amount to
Indigo Ltd on 1 January 2020 and the rest on 1 July
2020.
- During March 2020, Indigo Ltd declared a $5000
dividend. The dividend was paid in August 2020.
Required
In relation to the above intragroup
transactions:
1. Prepare
adjusting journal entries for the consolidation worksheet at 30
June 2020.
2. Explain in
detail why you made each adjusting journal entry.