Push Company owns 60% of Shove Company's outstanding common stock. Intra-entity sales are as follows: Year...

Push Company owns 60% of Shove Company's outstanding common stock. Intra-entity sales are as follows:

Year	Inventory Cost	Transfer Price	Inventory Remaining at Year End (at transfer price)
20X1	$80,000	$100,000	$30,000
20X2	$110,000	$130,000	$26,00

Assume Push sold the inventory to Shove. Using the fully adjusted equity method, what journal entry would be recorded by Push to defer the unrealized gross profit on inventory sales to Shove in 20X1?

A.	Income from Shove Company	6,000
	Investment in Shove Company		6,000
B.	Income from Shove Company	3,600
	Investment in Shove Company		3,600
C.	Investment in Shove Company	6,000
	Income from Shove Company		6,000
D.	Investment in Shove Company	3,600
	Income from Shove Company		3,600

Assume Shove sold the inventory to Push. Using the fully adjusted equity method, what journal entry would be recorded by Push to defer the unrealized gross profit on inventory sales to Shove in 20X1?

A.	Income from Shove Company	6,000
	Investment in Shove Company		6,000
B.	Income from Shove Company	3,600
	Investment in Shove Company		3,600
C.	Investment in Shove Company	6,000
	Income from Shove Company		6,000
D.	Investment in Shove Company	3,600
	Income from Shove Company		3,600

Assume Push sold the inventory to Shove. Using the fully adjusted equity method, what journal entry would be recorded by Push to recognize the realization of the 20X1 deferred intercompany profit and to defer the 20X2 unrealized gross profit on inventory sales to Shove?

A.	Income from Shove Company	2,000
	Investment in Shove Company		2,000
B.	Income from Shove Company	1,200
	Investment in Shove Company		1,200
C.	Investment in Shove Company	2,000
	Income from Shove Company		2,000
D.	Investment in Shove Company	1,200
	Income from Shove Company		1,200

Assume Shove sold the inventory to Push. Using the fully adjusted equity method, what journal entry would be recorded by Push to recognize the realization of the 20X1 deferred intercompany profit and to defer the 20X2 unrealized gross profit on inventory sales to Shove?

A.	Income from Shove Company	2,000
	Investment in Shove Company		2,000
B.	Income from Shove Company	1,200
	Investment in Shove Company		1,200
C.	Investment in Shove Company	2,000
	Income from Shove Company		2,000
D.	Investment in Shove Company	1,200
	Income from Shove Company		1,200

Expert Solution

ekkarill92 answered 1 year ago

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