Tally, Inc., sold $200,000 in inventory to Merna Company during 2015 for $250,000. Merna resold $175,000 of this merchandise in 2015 with the remainder to be disposed of during 2016. Assuming that Tally owns 40 percent of Merna and applies the equity method, what journal entry is recorded at the end of 2015 to defer the unrealized gross profit?
Tally, Inc., sold $200,000 in inventory to Merna Company during 2015 for $250,000. Merna resold $175,000 of this merchandise in 2015 with the remainder to be disposed of during 2016. Assuming that Tally owns 40 percent of Merna and applies the equity method, what journal entry is recorded at the end of 2015 to defer the unrealized gross profit?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Tally, Inc., sold $200,000 in inventory to Merna
Company during 2015 for $250,000. Mernal
resold $175,000 of this merchandise in 2015
with the remainder to be disposed of during
2016. Assuming that Tally owns 40 percent of
Merna and applies the equity method, what
journal entry is recorded at the end of 2015 to
defer the unrealized gross profit?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F247626b9-a398-46f6-b2d4-d507ac6dabf4%2F6837320a-9680-4e87-a369-78f4137e32dd%2Fqemohp_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Tally, Inc., sold $200,000 in inventory to Merna
Company during 2015 for $250,000. Mernal
resold $175,000 of this merchandise in 2015
with the remainder to be disposed of during
2016. Assuming that Tally owns 40 percent of
Merna and applies the equity method, what
journal entry is recorded at the end of 2015 to
defer the unrealized gross profit?
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