White Limited is the only shareholder of Brown Limited. Given below are independent intragroup transactions for the period ending 30^th June 2019.

1. During the year ending 30^th June 2019, Brown Limited sold inventory worth $50,000 to White Limited. Brown Limited made a profit after tax of $8,000. On 30^th June 2019, White Limited has sold 45% of these goods to Tony and 20% to Sam.

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  2. White Limited sold a depot to Brown Limited for $150,000. This had originally cost White Limited $120,000. The transaction took place on 1^st January 2017. Brown Limited charges depreciation at 5% per annum on a straight-line basis.

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  3. On 1^st June 2018, Brown Limited sold inventory costing $15,000 at a mark-up of 40% to White Limited. By 30^th June 2018, 30% of these inventories were sold to Jacob and the remaining 70% was sold on 2^nd July 2019 to Andrew.

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  4. On 1^st January 2018, White Limited sold inventory costing $10,000 to Brown Limited at a transfer price of $15,000. On 3^rd September 2018, Brown Limited sold half of these inventories back to White Limited, receiving $6,000 from White Limited. Of the remainder kept by Brown Limited, one-third was sold in March 2019 to Simran at a profit of $5,000.

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  5. On 29^th June 2019, White Limited declared a dividend of $15,000.

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  6. On 1^st October 2018, White Limited issued 1,000 10% debentures of $100 at nominal value. Brown Limited acquired 600 of these debentures. Interest is payable on 31^st March and 30^th September. Accruals are recognised in the legal entities’ accounts.

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  7. On 1^st May 2018, Brown Limited sold inventory to White Limited for $10,000, recording a before-tax profit of $3,000. Half of these inventories were sold by White Limited to John at 30^th June 2018.

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  8. On 1^st July 2018, Brown Limited sold a depreciable asset costing $10,000 to White Limited for $18,000. Brown Limited has not charged any depreciation on the asset before the sale. Both entities depreciate assets at 10% per annum.

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  Required:

  Prepare intragroup adjusting journal entries for the year ended 30^th June 2019 assuming an income tax rate of 20%.

Answer rating: 100% (QA)

intana Sntra roue Adsustineo entries tor the yeur ended 30June 2019 Aaguer Date A... View the full answer