Question

On January 1, 2000 Freddie Company purchased 100% of the voting stock of Bob Company at book value
when the book value of Bob's assets equaled their fair market value
Freddie accounts for its investment in Bob using the initial value (cost method) and Bob doesn't pay any dividends
On October 1st 2018, Freddie Company sold inventory to BOB Company for $1,000,000. Freddie had purchased
the merchandise for $700,000. Bob paid cash for the merchandise and it hadn't sold any of this inventory in 2018
In 2019 Bob sold 80% of the merchandise acquired from Freddie for $700,000.
In 2020 Bob sold the rest of the merchandise acquired from Freddie for $500,000
	ADDITIONAL INFORMATION FOR 2018, 2019 AND 2020 ARE AS FOLLOWS:
			Freddie		Bob
UNCONSOLIDATED NET INCOME 2018			5,000,000		200,000
UNCONSOLIDATED NET INCOME 2019			5,200,000		210,000
UNCONSOLIDATED NET INCOME 2020			5,500,000		225,000
INVENTORY 12/31/18 BALANCE SHEET			3,000,000		2,000,000
INVENTORY 12/31/19 BALANCE SHEET			2,800,000		1,600,000
INVENTORY 12/31/20 BALANCE SHEET			2,500,000		1,400,000
	REQUIRED:	FOR 2018
	A) MAKE THE JOURNAL ENTRY Freddie MAKES WHEN IT SELLS THE MERCHANDISE TO BOB (Freddie USES PERPETUAL INVENTORY)
	B) MAKE THE JOURNAL ENTRY BOB MAKES WHEN IT BUYS THE MERCHANDISE FROM Freddie (BOB USES PERIODIC INVENTORY)
	C) MAKE ANY NECESSARY WORKSHEET ENTRIES CONNECTED WITH THE INVENTORY TRANSACTION
	D) DETERMINE 2018 CONSOLIDATED INCOME
	E) DETERMINE 2018 CONSOLIDATED INVENTORY
		FOR 2019
	A) MAKE THE JOURNAL ENTRY BOB MAKES WHEN IT SELLS THE Freddie MERCHANDISE
	B) MAKE ANY NECESSARY WORKSHEET ENTRIES CONNECTED WITH THE INVENTORY TRANSACTION
	C) DETERMINE 2019 CONSOLIDATED INCOME
	D) DETERMINE 2019 CONSOLIDATED INVENTORY
		FOR 2020
	A) MAKE ANY NECESSARY WORKSHEET ENTRIES CONNECTED WITH THE INVENTORY TRANSACTION
	B) DETERMINE 2020 CONSOLIDATED INCOME
	C) DETERMINE 2020 CONSOLIDATED INVENTORY

Answer 1