In preparing the consolidation worksheet for Bolger Corporation and its 60 percent owned subsidiary, Feldman Company, the following elimination entries were proposed by Bolger€™s bookkeeper:

Bolger's bookkeeper recently graduated from Oddball University, and although the dollar amounts recorded are correct, he had some confusion in determining which accounts needed adjustment. All intercorporate sales in 20X5 were from Feldman to Bolger, and Feldman sells inventory at cost plus 40 percent of cost. Bolger uses the fully adjusted equity method in accounting for its ownership in Feldman.

Required
a. What percentage of the intercompany inventory transfer was resold prior to the end of 20X5?
b. Give the appropriate elimination entries needed at December 31, 20X5, to prepare consolidated financialstatements.

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Cash 80,000 Accounts Payable To eliminate the unpaid balance for intercorporate inventory sales in 20X5. 80,000 Cost of Goods Sold 12,000 Income from Subsidiary To eliminate unrealized inventory profits at December 31, 20X5 12,000 Income from Subsidiary 140,000 Sales To eliminate intercompany sales for 20X5 140,000