King Co. holds 70% of the common stock of Lee Co. King sold merchandise to Lee for $80,000 in 2020 and $90,000 in 2021. Approximately 30 percent of the inventory purchased during any one year is not used until the following year. King established the transfer price based on its normal gross profit rate. During 2020, King reported sales of $ 600,000 and cost of goods sold of $450,000. During 2021, King reported sales of $ 800,000 and cost of goods sold of $600,000. 

Prepare King’s consolidation entries required by the intra-entity inventory transfers for 2021. 

Assume King uses the partial equity method, so that Retained Earnings account should be adjusted.

Answer rating: 100% (QA)

To prepare Kings consolidation entries required by the intraentity inventory transfers for 2021 we n... View the full answer