Nat Ltd owns all the share capital of Cole Ltd. The income tax rate is 30%. The
Question:
Nat Ltd owns all the share capital of Cole Ltd. The income tax rate is 30%. The following transactions took place during the periods ended 30 June 2019 and 30 June 2020.
(a) On 1 May 2019, Nat Ltd sold inventories to Cole Ltd for $10,000 on credit, recording a profit of $2,000. Half of the inventories were unsold by Cole Ltd at 30June 2019 and none at 30 June 2020. Cole Ltd paid all the amount owed on 15 June 2019.
(b) On 10 June 2019, Cole Ltd sold inventories to Nat Ltd for $15,000 in cash. The inventories had previously cost Cole Ltd $12,000. Half of these inventories were unsold by Nat Ltd at 30 June 2019 and 30% at 30 June 2020.
(c) On 1 January 2020, Cole Ltd sold inventories costing $6,000 to Nat Ltd at a transfer price of $7,000paid in cash. The entire inventories were sold by Nat Ltd to external entities by 30 June 2020.
Required
In relation to the above intragroup transactions - prepare adjusting journal entries for the consolidation worksheet at 30 June 2019 and 30 June 2020.
Intermediate Accounting principles and analysis
ISBN: 978-0471737933
2nd Edition
Authors: Terry d. Warfield, jerry j. weygandt, Donald e. kieso