LOOSE-LEAF Advanced Financial Accounting with Connect
11th Edition
ISBN: 9781259605192
Author: Theodore E. Christensen
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 6, Problem 6.1.3E
Multiple−Choice Questions on Intercompany Inventory Transfers [AICPA Adapted]
Select the correct answer a for each of the following questions:
Note: Items 3 and 4 are based on the following information:
Nolan owns 100 percent of the capital stock of both Twill Corporation and Webb Corporation. Twill purchases merchandise inventory from Webb at 140 percent of Webb’s cost. During 20X0. Webb sold merchandise that had cost it $40,000 to Twill. Twill sold all of this merchandise to unrelated customers for $81,200 during 20X0. In preparing combined financial statements for 20X0. Nolan’s bookkeeper disregarded the common ownership of Twill and Webb.
3. What amount should be eliminated from cost of goods sold in the combined income statement for 20X0?
- $56,000
- $40,000
- $24,000
- $16,000
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Anderson Company, a 90% owned subsidiary of Philbin Corporation, transfers inventory to Philbin at a 25% gross profit rate.
The following data are available pertaining specifically to Philbin's intra-entity purchases from Anderson. Anderson was
acquired on january 1, 2020.
2020
2021
2022
Purchases by Philbin
Ending inventory on Philbin's books 1,200 4,000
$ ৪,000 5 12,000 $15.000
3,000
Assume the equity method is used. The following data are available pertaining to Anderson's income and dividends.
2020
2021
2022
$ 70,000 $ 85,000 $ 94,000
Dividends paid by Anderson 10,000 10,000 15,000
Anderson's net income
Assuming there are no excess amortizations associated with the consolidation, and no other intra-entity asset transfers,
compute the net income attributable to the noncontrolling interest of Anderson for 2022.
O $9,400.
$9,375.
$9,425.
$8,485.
$9,325.
Chapter 6 Solutions
LOOSE-LEAF Advanced Financial Accounting with Connect
Ch. 6 - Why must inventory transfers to related companies...Ch. 6 - Why is there a need for a consolidation entry when...Ch. 6 - Prob. 6.3QCh. 6 - How do unrealized intercompany profits on a...Ch. 6 - How do unrealized intercompany profits on an...Ch. 6 - Prob. 6.6QCh. 6 - Prob. 6.9QCh. 6 - Prob. 6.10QCh. 6 - How is the amount of consolidated retained...Ch. 6 - How will the elimination of unrealized...
Ch. 6 - Prob. 6.14QCh. 6 - Is an inventory sale from one subsidiary to...Ch. 6 - Prob. 6.16QCh. 6 - Prob. 6.1.1ECh. 6 - Prob. 6.1.2ECh. 6 - MultipleChoice Questions on Intercompany Inventory...Ch. 6 - MultipleChoice Questions on Intercompany Inventory...Ch. 6 - Prob. 6.1.5ECh. 6 - Prob. 6.1.6ECh. 6 - Prob. 6.3.1ECh. 6 - Prob. 6.3.2ECh. 6 - Prob. 6.3.3ECh. 6 - Prob. 6.4.1ECh. 6 - Prob. 6.4.2ECh. 6 - Prob. 6.4.3ECh. 6 - Prob. 6.4.4ECh. 6 - Prob. 6.5.1ECh. 6 - Prob. 6.5.2ECh. 6 - Prob. 6.5.3ECh. 6 - Prob. 6.7ECh. 6 - Prob. 6.8ECh. 6 - Prob. 6.9ECh. 6 - Prob. 6.10ECh. 6 - Prob. 6.11ECh. 6 - Prob. 6.12ECh. 6 - Prob. 6.13ECh. 6 - Prob. 6.15ECh. 6 - Prior-Period Inventory Profits Home Products...Ch. 6 - Prob. 6.17PCh. 6 - Prob. 6.18PCh. 6 - Prob. 6.19PCh. 6 - Prob. 6.20PCh. 6 - Prob. 6.21PCh. 6 - Prob. 6.22PCh. 6 - Prob. 6.24PCh. 6 - Prob. 6.26PCh. 6 - Prob. 6.27PCh. 6 - Prob. 6.28PCh. 6 - Prob. 6.29PCh. 6 - Prob. 6.30PCh. 6 - Prob. 6.31PCh. 6 - Prob. 6.33PCh. 6 - Prob. 6.34PCh. 6 - Prob. 6.35APCh. 6 - Prob. 6.36AP
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- 2. Martindale Company, a 100% owned subsidiary of Weisman Corporation, sells inventory to Weisman at a 20% profit on selling price. The following data are available pertaining to inter-company purchases by Weisman: Inter-company sales: Unsold at year end (based on selling price): 2020: $18,000 2020: $4,000 2021: $19,400 2021: $6,000 2022: $21,500 2022: $8,000 Martindale's profit numbers were $125,000, $142,000 and $265,000 for 2020, 2021, and 2022, respectively. Weisman received dividends from Martindale of $25,000 for 2020 and 2021, and $30,000 for 2022. Assume Weisman uses the equity method to account for its investment in Martindale. What is the balance in pre-consolidation Income (loss) from subsidiary for 2022? Select one: A. $268,600 B. $235,000 C. $265,400 D. $264,600arrow_forwardDetermine the consolidated balances of the cost of goods sold account in the year 20x6.arrow_forwardPlanet Corporation acquired 90 percent of Saturn Company’s voting shares of stock in 20X1. During 20X4, Planet purchased 44,000 Playday doghouses for $33 each and sold 29,000 of them to Saturn for $39 each. Saturn sold all of the doghouses to retail establishments prior to December 31, 20X4, for $54 each. Both companies use perpetual inventory systems. Required: Prepare the journal entries Planet recorded for the purchase of inventory and resale to Saturn Company in 20X4. Prepare the journal entries Saturn recorded for the purchase of inventory and resale to retail establishments in 20X4. Prepare the worksheet consolidation entry(ies) needed in preparing consolidated financial statements for 20X4 to remove all effects of the intercompany sale.arrow_forward
- Bla Limited sells inventory to its parent, Whi Limited at cost price plus 125% mark-up. • Closing inventories in the records of Whi Limited on 30 June 2022 amount to R157 500. • Net realisable value of inventory on hand in the books of Whi limited amounts to R107 500 on 30 June 2022. Ignore tax implications Required:Clearly illustrate how write-down of inventory will be with regard to the above information, showing inventory at selling price, value according to the group, net realisable value, write-down in Whi Limited’s records, Unrealised profit from the group’s perspective and additional elimination of unrealised profit required through pro forma consolidation journalarrow_forwardBla Limited sells inventory to its parent, Whi Limited at cost price plus 125% mark-up. • Closing inventories in the records of Whi Limited on 30 June 2022 amount to R157 500. • Net realisable value of inventory on hand in the books of Whi limited amounts to R107 500 on 30 June 2022. Ignore tax implications Required:Show how the journal entry would be recorded in the books of Whi Limited on 30 June 2022 in accordance with IAS 2. And also show pro forma consolidation journal for the group.arrow_forwardVishnuarrow_forward
- Brooks owns 30% of Ghost Inc. The following information pertains to an intra entity transfer. What is the journal entry for 12/31/20 and what is the journal entry in 2021 if the remaining inventory is sold? Make sure to date your journal entries. Year Cost to Ghost Price to Brooks (selling price) |12/31 (ending inventory bal. for Brooks) 2020 $42,000 $63,000 $15,000 BI E E P Format Date Account Debit Credit rate Windowr Dothi tohloarrow_forwardB Limited sells inventory to its parent, W Limited at cost price plus 125% mark-up. • Closing inventories in the records of W Limited on 30 June 2022 amount to R157 500.• Net realisable value of inventory on hand in the books of W limited amounts to R107 500 on 30 June 2022. • Ignore tax implications Clearly illustrate how write-down of inventory will be with regard to the above information, showing inventory at selling price, value according to the group, net realisable value, write-down in W Limited’s records, Unrealised profit from the group’s perspective and additional elimination of unrealised profit required through pro forma consolidation journal.arrow_forwardTopic: Intercompany Sale of Inventoryarrow_forward
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