Loose Leaf Advanced Accounting with Connect Access Card
12th Edition
ISBN: 9781259184741
Author: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Publisher: McGraw-Hill Education
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Chapter 5, Problem 2P
To determine
Identify the appropriate answer for the given statement from the given choices.
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James Corporation owns 80 percent of Carl Corporation’s common stock. During October, Carl sold merchandise to James for $250,000. At December 31, 40 percent of this merchandise remains in James’s inventory. Gross profit percentages were 20 percent for James and 30 percent for Carl. The amount of intra-entity gross profit in inventory at December 31 that should be eliminated in the consolidation process isa. $24,000b. $30,000c. $20,000d. $75,000
P acquired 70% of S in 20X8. The statements of profit or loss of the two companies for the year ended 31 December 20X9 showed revenues:
P $100000
S $70000
During November 20X9, S sold goods to P for $8000. None of these items remained in inventory at the end of year.
What is the consolidated revenue for P for the year ended 31 December 20X9?
K owns 80% of T’s common stock. During October T sold merchandise to K for $250,000. On December 31 40% of this merchandise remains in K’s inventor. Gross profit percentages were 20% for K and 30% for T. What amount of intra-entity gross profit in inventory on December 31 should be eliminated in the consolidation process?
Chapter 5 Solutions
Loose Leaf Advanced Accounting with Connect Access Card
Ch. 5 - Prob. 1QCh. 5 - Prob. 2QCh. 5 - Prob. 3QCh. 5 - Prob. 4QCh. 5 - James, Inc., sells inventory to Matthews Company,...Ch. 5 - Prob. 6QCh. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Prob. 9QCh. 5 - Prob. 10Q
Ch. 5 - Prob. 11QCh. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - Prob. 10PCh. 5 - Prob. 11PCh. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Prob. 20PCh. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - 29. Compute the balances in problem (28) again,...Ch. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 1DYSCh. 5 - Prob. 2DYS
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- KK Corporation owns 80 percent of LL Corporation’s common stock. During October, LL sold merchandise to KK for P100.000. At December 31, 50 percent of this merchandise remains in KK’s inventory. Gross profit percentages were 30 percent for KK and 40 percent for LL. The amount of unrealized intercompany profit in ending inventory at December 31 that should eliminated in the consolidation process isarrow_forwardOR Alex Company owns 80 percent of the common stock of Cairo Company. During the year, Alex sold merchandise that cost $9,000 to Cairo for $15,000. At the end of the year, Cairo's ending inventory included merchandise that was purchased from Alex for $3,000. What entry is required to eliminate the effect of ending inventory in the consolidation worksheet at the end of the year? COGS Beginning Inventory Ending Inventory Sales Credit $3,000 Debit $3,000 Debit $15,000arrow_forward4. Jackson company owns 80% of Canton corporation's common stock during October canceled merchandise to Jackson for $250,000 at December 31, 40% of the merchandise remains in Jackson's inventory gross profit percentage is 120% for Jackson and 30% for Canon the amount of intra- entity gross profit in inventory at December 31 That should be eliminated in the consolidation process is a. Zero b. $24,000, c. $75,000 d. $30,000arrow_forward
- Fromage purchased 80% of the equity shares in Frais on 1 January 20X1. During the year ended 31 December 20X1, Fromage sold inventory to Frais at a sales price of £50,000. None of the goods remained in Frais' inventory. Fromage applied a margin of 20%. Extracts from the statement of profit or loss for the two entities are shown below: Fromage Frais £000 £000 Revenue 1,000 750 Cost of sales (650) (250) What would be the revenue and cost of sales figures reported in the consolidated statement of profit or loss for the year ended 31 December 20X1? Answer to the nearest £000 a. Revenue 1700 Cost of sales 850 O b. Revenue 1750 Cost of sales 910 O c. Revenue 1700 Cost of sales 860 d. None of these options are correct Revenue 1550 Cost of sales 800arrow_forward(a) Jessica Ltd sold inventory during the current period to its wholly owned subsidiary, Amelie Ltd, for $15 000.These items previously cost Jessica Ltd $12 000. Amelie Ltd subsequently sold half the items to Ningbo Ltd for $8000. The tax rate is 30%. The group accountant for Jessica Ltd, Li Chen, maintains that the appropriate consolidation adjustment entries are as follows: Sales Dr $15,000 Cost of Sales Cr $13,000 Inventory Cr $2,000 Deferred Tax Asset Dr $300 Income Tax Expense Cr $300 Required:(i) Discuss whether the entries suggested by Li Chen are correct, explaining on a line-by-line basis the correct adjustment entry.(ii)Determine the consolidation worksheet entries in the following year, assuming the inventory has been –sold, and explain the adjustments on a line-by-line basis. (b) On 1 July 2016 Liala Ltd sold an item of plant to Jordan Ltd for $450000 when its’ carrying value in Liala Ltd book was $600000 (costs…arrow_forwardScarlet Company owns 80% of Tamara Corp.’s common stock. During October 2019 Tamara sold merchandise to Scarlet for 125,000. At December 31, 2019, one-half of the merchandise remained in Scarlet inventory. For 2019, gross profit percentages were 30% for Scarlet and 40% for Tamara. The amount of unrealized intercompany profit in ending inventory at December 31, 2019 that should be eliminated in consolidation is: a. 25,000 b. 50,000 c. 20,000 d. 18,750arrow_forward
- Scarlet Company owns 80% of Tamara Corp.'s common stock. During October 2019 Tamara sold merchandise to Scarlet for 125,000. At December 31, 2019, one-half of the merchandise remained in Scarlet inventory. For 2019, gross profit percentages were 30% for Scarlet and 40% for Tamara. The amount of unrealized intercompany profit in ending inventory at December 31, 2019 that should be eliminated in consolidation is: O 20,000 O 18,750 O 25,000 O 50,000arrow_forwardLet Company owns 80% of Tam Corp.’s common stock. During October 2019 Tam sold merchandise to Let for 125,000. At December 31, 2019, one-half of the merchandise remained in Let inventory. For 2019, gross profit percentages were 30% for Let and 40% for Tam. The amount of unrealized intercompany profit in ending inventory at December 31, 2019 that should be eliminated in consolidation is: a.) 50,000 b.) 20,000 c.) 18,750 d.) 25,000arrow_forwardSubject: Corporate Accounting Q) Jessica Ltd sold inventory during the current period to its wholly owned subsidiary, Amelie Ltd, for $15 000. These items previously cost Jessica Ltd $12 000. Amelie Ltd subsequently sold half the items to Ningbo Ltd for $8000. The tax rate is 30%. The group accountant for Jessica Ltd, Li Chen, maintains that the appropriate consolidation adjustment entries are as follows: (i) Sales.....Dr 15,000 Cost of Sales...Cr 13,000 Inventory..........Cr 2,000 (ii) Deferred Tax Asset...Dr 300 Income Tax Expense...Cr 300Required(i) Discuss whether the entries suggested by Li Chen are correct, explaining on a line-by-line basis the correct adjustment entry. (ii) Determine the consolidation worksheet entries in the following year, assuming the inventory has been –sold, and explain the adjustments on a line-by-line basis.arrow_forward
- Pint Co. owns 90% of the outstanding shares of Glass Inc. During 2022, Pint sold merchandise costing $100,000 to Glass for $200,000. On December 31, 2022, 25% of this merchandise remains in Sub's inventory. Assuming a 40% tax rate, how much unrealized profit should be eliminated from ending inventory in the consolidation process on December 31, 2022? Multiple Choice a. $25,000 b. $30,000 c. $50,000 d. $40,000arrow_forwardTookey Ltd sold inventory items (with a cost of $75 000) to its parent Milky Ltd for $135 000. One third of the inventory items were sold by Milky Ltd to external parties before the financial year end. Ignoring taxes, which of the following statements is correct with respect to this transaction only? a. Consolidated sales will decrease by $75 000 Ob. Consolidated sales will decrease by $95 000 c. Consolidated profit will decrease by $20 000 d. Consolidated profit will decrease by $40 000 e. Consolidated profit will decrease by $60 000 O Oarrow_forwardJessica Ltd sold inventory during the current period to its wholly owned subsidiary, Amelie Ltd, for $15 000. These items previously cost Jessica Ltd $12 000. Amelie Ltd subsequently sold half the items to Ningbo Ltd for $8000. The tax rate is 30%. The group accountant for Jessica Ltd, Li Chen, maintains that the appropriate consolidation adjustment entries are as follows: Sales. Dr15 000Cost of Sales Cr 13 000 Inventory Cr 2 000 DeferredTaxAsset Dr 300 Income Tax ExpenseCr 300 Required: (i) Discuss whether the entries suggested by Li Chen are correct, explaining on a line-by-line basis the correct adjustment entry. (ii)Determine the consolidation worksheet entries in the following year, assuming the inventory has been –sold, and explain the adjustments on a line-by-line basis.arrow_forward
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