In preparing for year 2021 consolidation entries, to account for intra-entity gross profit deferred from year 2020, it should enter consolidation entry *G by:
In preparing for year 2021 consolidation entries, to account for intra-entity gross profit deferred from year 2020, it should enter consolidation entry *G by:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Alpha, Inc. owns 80 percent of outstanding stock of Tulip Corporation. Intra-entity sales of $320,000 occurred during 2020 and again in 2021. This merchandise cost $240,000 each year. Of the total transfers, $70,000 was still held on December 31, 2020, with $50,000 unsold on December 31, 2021. The sales is from Alpha to Tulip. In preparing for year 2021 consolidation entries, to account for intra-entity gross profit deferred from year 2020, it should enter consolidation entry *G by:
| a. |
Debit Investment in Tulip at $17,500 |
|
| b. |
Debit |
|
| c. |
Debit Inventory at $17,500. |
|
| d. |
Credit Inventory at $12,500. |
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