Question

ParCorp owns 90 percent of ChiCorp. ParCorp purchased inventory from ChiCorp for $90 on August 20,...

ParCorp owns 90 percent of ChiCorp. ParCorp purchased inventory from ChiCorp for $90 on August 20, 20X8, and resold 70 percent of the inventory to unaffiliated companies on December 1, 20X8, for $100. ChiCorp produced the inventory sold to ParCorp for $67. Provide the elimination entry for Dec 31, 20X8 consolidation.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Solution :-

Here parcorp owns 90 % of chicorp

Parcorp = Parent company

Chicorp = Subsidiary company

When subsidiary sold inventory to parent company than it is a upstream sale

For subsidiary company

Sales = $90

Cost = $67

Profit = $23

profit on sales = $23*100/$90 = 25.56 %

Unsold stock with parent company = $ 90 *30 % = $27

So, unrealised profit on unsold stock = $ 27* 25.56 % = $6.9

Hence the elimination entry for Dec 31 , 20X8 consolidation is

Cost of goods sold A/c Dr $6.9

To Inventory A/c Cr $6.9

( elimination of unreailsed profit)

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
ParCorp owns 90 percent of ChiCorp. ParCorp purchased inventory from ChiCorp for $90 on August 20,...
ParCorp owns 90 percent of ChiCorp. ParCorp purchased inventory from ChiCorp for $90 on August 20, 20X8, and resold 70 percent of the inventory to unaffiliated companies on December 1, 20X8, for $100. ChiCorp produced the inventory sold to ParCorp for $67. Provide the elimination entry for Dec 31, 20X8 consolidation.
Pilfer Company acquired 90 percent ownership of Scrooge Corporation in 20X7, at underlying book value. On...
Pilfer Company acquired 90 percent ownership of Scrooge Corporation in 20X7, at underlying book value. On that date, the fair value of noncontrolling interest was equal to 10 percent of the book value of Scrooge Corporation. Pilfer purchased inventory from Scrooge for $90,000 on August 20, 20X8, and resold 70 percent of the inventory to unaffiliated companies on December 1, 20X8, for $100,000. Scrooge produced the inventory sold to Pilfer for $67,000. The companies had no other transactions during 20X8....
Pepper Corporation owns 75 percent of Salt Company's voting shares. During 20X8, Pepper produced 50,000 chairs...
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. 23) Based on the information given above, what amount of cost of goods...
Parent Corporation owns 90 percent of Subsidiary Company's stock. During 2018, Parent sold inventory purchased $48,000...
Parent Corporation owns 90 percent of Subsidiary Company's stock. During 2018, Parent sold inventory purchased $48,000 to Subsidiary for $60,000. Subsidiary then sold half of the inventory to a nonaffiliate by the end of the year. On 2018, Parent sold $15,000 inventory which was purchased from Subsidiary in 2017. The cost of inventory for Subsidiary was $10,000. Prepare Parent’s adjusting journal entries and the consolidation entries that related to intercompany sale of inventory for 2018. (Remember to include all necessary...
Pie Bakery owns 70 percent of Slice Products Company’s stock. On January 1, 20X9, inventory reported...
Pie Bakery owns 70 percent of Slice Products Company’s stock. On January 1, 20X9, inventory reported by Pie included 28,000 bags of flour purchased from Slice at $9 per bag. By December 31, 20X9, all the beginning inventory purchased from Slice Products had been baked into products and sold to customers by Pie. There were no transactions between Pie and Slice during 20X9. Both Pie Bakery and Slice Products price their sales at cost plus 50 percent markup for profit....
Holiday Bakery owns 70 percent of Farmco Products Company’s stock. On January 1, 20X9, inventory reported...
Holiday Bakery owns 70 percent of Farmco Products Company’s stock. On January 1, 20X9, inventory reported by Holiday included 23,000 bags of flour purchased from Farmco at $21 per bag. By December 31, 20X9, all the beginning inventory purchased from Farmco Products had been baked into products and sold to customers by Holiday. There were no transactions between Holiday and Farmco during 20X9. Both Holiday Bakery and Farmco Products price their sales at cost plus 50 percent markup for profit....
Assume that a parent company owns 80 percent of its subsidiary. The parent company uses the...
Assume that a parent company owns 80 percent of its subsidiary. The parent company uses the equity method to account for its investment in subsidiary. On January 1, 2012, the parent company issued to an unaffiliated company $1,000,000 (face value) 10 year, 10 percent bond payable for a $61,000 premium. The bonds pay interest in December 31 of each year. On January 1, 2015, the subsidiary acquired 40 percent of the bonds for $386,000. Both companies use straight-line amortization. In...
Assume that a parent company owns 80 percent of its subsidiary. The parent company uses the...
Assume that a parent company owns 80 percent of its subsidiary. The parent company uses the equity method to account for its investment in subsidiary. On January 1, 2012, the parent company issued to an unaffiliated company $1,000,000 (face value) 10 year, 10 percent bond payable for a $61,000 premium. The bonds pay interest in December 31 of each year. On January 1, 2015, the subsidiary acquired 40 percent of the bonds for $386,000. Both companies use straight-line amortization. In...
Pea Company purchased 70 percent of Split Company’s stock approximately 20 years ago. On December 31,...
Pea Company purchased 70 percent of Split Company’s stock approximately 20 years ago. On December 31, 20X8, Pea purchased a building from Split for $300,000. Split had purchased the building on January 1, 20X1, at a cost of $400,000 and used straight-line depreciation on an expected life of 20 years. The asset’s total estimated economic life is unchanged as a result of the intercompany sale. Record the entry to eliminate the gain on the equipment and to correct the asset's...
Plumber Corporation owns 60 percent of Socket Corporation’s voting common stock. On December 31, 20X4, Plumber...
Plumber Corporation owns 60 percent of Socket Corporation’s voting common stock. On December 31, 20X4, Plumber paid Socket $324,000 for dump trucks Socket had purchased on January 1, 20X2. Both companies use straight-line depreciation. The consolidation entry included in preparing consolidated financial statements at December 31, 20X4, was Consolidation Worksheet Entry Debit Credit Trucks 36,000 Gain on Sale of Trucks 36,000 Accumulated Depreciation 72,000 Required: a. What amount did Socket pay to purchase the trucks on January 1, 20X2? b....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT