Refer to Exercise 6‑7. Using the same figures, assume that the sales were upstream instead of downstream.

Exercise 6‑7

Perkins Company owns 85% of Sheraton Company. Perkins Company sells merchandise to Sheraton Company at 20% above cost. During 2019 and 2020, such sales amounted to $450,000 and $486,000, respectively. At the end of each year, Sheraton Company had in its inventory one-third of the amount of goods purchased from Perkins during that year.

Required:

Prepare the workpaper entries necessary to eliminate the effects of the intercompany sales for 2019 and 2020.