During 2021, Spring Company, a 70%-owned subsidiary of Brook Corporation, sold merchandise to Brook at a selling price of $400,000, which includes a 40% gross profit. Included in Brook's December 31, 2021, inventories were goods acquired from Spring at a billed price of $250,000. On December 31, 2020, Brook owned inventory purchased from Spring for $210,000. All sales from Spring to Brook include 40% gross profit.

Prepare all worksheet eliminations (in journal entry format) for Brook Corporation and subsidiary that would be made on the 2021 consolidated worksheet as a result of these inventory transactions. Show all computations.

Answer rating: 100% (QA)

Answer To eliminate the effects of the intercompany sale of merchandise and the resulting inventory ... View the full answer