P Company owns 80% of the outstanding stock of S Company. During 2011, S Company reported net
Question:
P Company owns 80% of the outstanding stock of S Company. During 2011, S Company reported net income of $525,000 and declared no dividends. At the end of the year, S Company’s inventory included $487,500 in unrealized profit on purchases from P Company. Intercompany sales for 2011 totaled $2,700,000.
Required:
Prepare in general journal form all consolidated financial statement workpaper entries necessary at the end of the year to eliminate the effects of the 2011 intercompany sales.
Step by Step Answer:
1 Sales 2700000 Purchases Cost of Goods Sold 2700000 To eliminate inter...View the full answer
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Financial statements of a business having numerous divisions or subsidiaries are called consolidated financial statements. Companies frequently refer to the aggregated reporting of their entire firm together when using the term \"consolidated\" in financial statement reporting. Consolidated financial statement reporting, on the other hand, is defined by the Financial Accounting Standards Board as the reporting of an entity that is organized with a parent company and subsidiaries.
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