Planet Corporation acquired 90 percent of Saturn Company’s voting shares of stock in 20X1. During 20X4, Planet purchased 48,000 Playday doghouses for $28 each and sold 33,000 of them to Saturn for $35 each. Saturn sold 26,000 of the doghouses to retail establishments prior to December 31, 20X4, for $50 each. Both companies use perpetual inventory systems. Required: Prepare all 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 the effects of the intercompany sale.

Planet Corporation acquired 90 percent of Saturn Company’s voting shares of stock in 20X1. During 20X4, Planet purchased 48,000 Playday doghouses for $28 each and sold 33,000 of them to Saturn for $35 each. Saturn sold 26,000 of the doghouses to retail establishments prior to December 31, 20X4, for $50 each. Both companies use perpetual inventory systems. Required: Prepare all 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 the effects of the intercompany sale.

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

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

Problem 5RE: Dani Corporation signed a binding commitment on December 2 to purchase inventory for 300,000 cash on...

See similar textbooks

Required:

Prepare all 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 the effects of the intercompany sale.

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Financial Reporting in Hyperinflationary Economies

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Shaquille Corporation began the current year with inventory of 50,000. During the year, its purchases totaled 110,000. Shaquille paid freight charges of 8,500 for those purchases. At the end of the year, Shaquille had inventory of 47,800. Prepare a schedule to determine Shaquille's cost of goods sold for the current year.
Planner Corporation owns 60 percent of Schedule Company’s voting shares. During 20X3, Planner produced 29,000 computer desks at a cost of $96 each and sold 14,000 of them to Schedule for $108 each. Schedule sold 9,000 of the desks to unaffiliated companies for $134 each prior to December 31, 20X3, and sold the remainder in early 20X4 for $144 each. Both companies use perpetual inventory systems. Required: What amounts of cost of goods sold did Planner and Schedule record in 20X3? What amount of cost of goods sold must be reported in the consolidated income statement for 20X3? Prepare the worksheet consolidation entry or entries needed in preparing consolidated financial statements at December 31, 20X3, relating to the intercorporate sale of inventory.
Pepper Corporation owns 75 percent of Salt Company's voting shares. During 20X8, Pepper produced 50,000 chairs at a cost of $79 each and sold 35,000 chairs to Salt for $90 each. Salt sold 18,000 of the chairs to unaffiliated companies for $117 each prior to December 31, 20X8, and sold the remainder in early 20X9 to unaffiliated companies for $130 each. Both companies use perpetual inventory systems. Based on the information given above, what amount of cost of goods sold must be eliminated from the consolidated income statement for 20X8? Multiple Choice A. $2,963,000 B. $1,620,000 C. $2,765,000 D. $1,422,000
Pepper Corporation owns 75 percent of Salt Company's voting shares. During 20X8, Pepper produced 50,000 chairs at a cost of $79 each and sold 35,000 chairs to Salt for $90 each. Salt sold 18,000 of the chairs to unaffiliated companies for $117 each prior to December 31, 20X8, and sold the remainder in early 20X9 to unaffiliated companies for $130 each. Both companies use perpetual inventory systems. Based on the information given above, what amount of cost of goods sold must be reported in the consolidated income statement for 20X8? Multiple Choice A. $1,422,000B. $2,963,000 C. $1,620,000 D. $2,765,000
Lorn Corporation purchased inventory from Dresser Corporation for P120,000 on September 20, 20x2, and resold 80% of the purchased inventory to unaffiliated companies prior to December 31, 20x2, for P140,000. Dresser produced the inventory sold to Lorn for P75,000. Lorn owns 70% of Dresser’s voting common stock. The companies had no other transactions during 20x2. What amount of cost of goods sold will be reported in the 20x2 consolidated income statement? A. P60,000 C. P96, 000B. P75, 000 D. P120, 000 E. P171, 000
Planner Corporation owns 60 percent of Schedule Company’s voting shares. During 20X3, Planner produced 29,000 computer desks at a cost of $96 each and sold 14,000 of them to Schedule for $108 each. Schedule sold 9,000 of the desks to unaffiliated companies for $134 each prior to December 31, 20X3, and sold the remainder in early 20X4 for $144 each. Both companies use perpetual inventory systems. Prepare the worksheet consolidation entry or entries needed in preparing consolidated financial statements at December 31, 20X4, relating to the intercorporate sale of inventory. Prepare the worksheet consolidation entry or entries needed in preparing consolidated financial statements at December 31, 20X4, relating to the intercorporate sale of inventory if the sales were upstream. Assume that Schedule produced the computer desks at a cost of $96 each and sold 14,000 desks to Planner for $108 each in 20X3, with Planner selling 9,000 desks to unaffiliated companies in 20X3 and the remaining…
Jarvis owns 30% of McLintock. During the year to 31 December 20X4 McLintock sold $2 million of goods to Jarvis, of which 40% were still held in inventory by Jarvis at the year end. McLintock applies a mark-up of 25% on all goods sold. What effect would the above transactions have on group inventory at 31 December 20X4? A Debit group inventory $48,000 B Debit group inventory $160,000 C Credit group inventory $48,000 D No effect on group inventory
Goddy Company owns 80% of the common stock of Morris, Inc. In the current year, Goddy reports sales of $10,000,000 and cost of goods sold of $7,500,000. For the same period, Morris has sales of $200,000 and cost of goods sold of $160,000. During the year, Goddy sold merchandise to Morris for $60,000 at a price based on the normal markup. At the end of the year, Morris still possesses 30 percent of this inventory. Compute consolidated cost of goods so ld. Select one: a. $7,604,500. b. $7,500,000. c. $7,660,000. d. $7,615,000. e. $7,600,000.
Bisharp Corporation owns 80% of Rufflet, Inc. common stock. During 20A, Bisharp sold to Rufflet inventory of P250,000 on the same terms as sales made to third parties. Rufflet sold all of the inventory purchased from Bisharp in 20A. The following information pertains to Bisharp and Rufflet's sales for 20A, respectively: Sales P1,000,000 and P700,000; Cost of merchandise sold P400,000 and P350,000. What amount should Bisharp report as cost of merchandise sold in its 20A consolidated income statement?
On January 1, 20X1, Rivera Company (RC) and Caventa Company (CC) each acquired 40% of the ordinaryvoting shares of Tulang Company (TC) for P500,000. They then both agreed to share control of TC.In 20X1, RC purchased goods from TC for P150,000. On December 31, 20X1, P80,000 of the goods purchasedremains in TC’s inventory. TC sells goods at 25% mark-up based on the sale.For the year ended December 31, 20X1, TC reported a profit of P400,000 and declared and paid dividends ofP150,0000. Also, the fair value of each venturer’s investment in TC is P600,000. There is no published quotationfor TC.RC and CC account for jointly controlled entities using the equity method.Required: Determine the following:1. The amount of income RC should recognize from TC.2. The value of RC’s investment in TC at December 31, 20X1.3. The amount of income CC should recognize from TC.4. The value of CC’s investment in TC at December 31, 20X1.
Jarvis owns 30% of McLintock. During the year to 31 December 20X4 McLintock sold $2 million of goods to Jarvis, of which 40% were still held in inventory by Jarvis at the year end. McLintock applies a mark-up of 25% on all goods sold. What effect would the above transactions have on group inventory at 31 December 20X4?
Brandy Corporation owns 60 percent of Downer's voting shares. During 20X3, Brandy produced 50,000 computer desks at a cost of $82 each and sold 20,000 of them to Draw for $94 each. Downer sold 14,000 of the desks to unaffiliated companies for $130 each prior to December 31, 20X3, and sold the remainder in early 20X4 for $140 each. Both companies use perpetual inventory systems. Tax rate is 30 percent. Required What amounts of cost of goods sold did Brandy and Downer record in 20X3? What amount of cost of goods sold must be reported in the consolidated income statement for 20X3? Prepare the necessary journal entry to eliminate the intra-gorup sales and cost of goods sold.