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On 1/1/2000 Crazy Company purchased all the outstanding stock of Normal Company. On 10/1/2011 Crazy sold...

On 1/1/2000 Crazy Company purchased all the outstanding stock of Normal Company. On 10/1/2011 Crazy sold inventory to Normal for $40,000. This inventory had cost Crazy $20,000 to produce. At the end of 2011 Normal had sold 1/4 of this inventory for $25,000. In 2012 Normal sold the rest of this inventory for $69,000.

REQUIRED:

PREPARE THE JOURNAL ENTRIES FOR CRAZY, NORMAL AND WORKSHEET FOR 2011, 2012 both Crazy and Normal use perpetual inventory.

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Answer #1

JOURNAL ENTRIES

FOR CRAZY
10/1/2011 Accounts receivable A/c Dr. 40000
To Sales 40000
cost of goods sold A/c Dr. 20000
To Inventory 20000
FOR NORMAL
10/1/2011 Inventory A/c Dr. 40000
To Accounts payable A/c 40000
12/31/2011 Accounts receivable A/c Dr. 25000
To Sales 25000
cost of goods sold A/c Dr. 10000
To Inventory 10000
(Being 1/4th inventory sold)
year 2012 Accounts receivable A/c Dr. 69000
To Sales 69000
cost of goods sold A/c Dr. 30000
To Inventory 30000
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