Planet Corporation acquired 90 percent of Saturn Company’s voting shares of stock in 20X1. During 20X4, Planet purchased 44,000 Playday doghouses for $33 each and sold 29,000 of them to Saturn for $39 each. Saturn sold all of the doghouses to retail establishments prior to December 31, 20X4, for $54 each. Both companies use perpetual inventory systems.Required:Prepare the journal entries Planet recorded for the purchase of inventory and resale to Saturn Company in 20X4.Prepare the journal entries Saturn recorded for the purchase of inventory and resale to retail establishments in 20X4.Prepare the worksheet consolidation entry(ies) needed in preparing consolidated financial statements for 20X4 to remove all effects of the intercompany sale.

Answer to (1) : Journal entries Planet recorded for the purchase of inventory and resale to Saturn…

Answered: Planet Corporation acquired 90 percent…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 2P

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Required:

Prepare the journal entries Planet recorded for the purchase of inventory and resale to Saturn Company in 20X4.
Prepare the journal entries Saturn recorded for the purchase of inventory and resale to retail establishments in 20X4.
Prepare the worksheet consolidation entry(ies) needed in preparing consolidated financial statements for 20X4 to remove all effects of the intercompany sale.

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