Jones Ltd owns all the share capital of Johnson Ltd.  The following transactions relate to the financial year ended 30 June 2020. The tax rate is 30%.

 

i)              During the year ended 30 June 2020, Johnson Ltd sold $200,000 worth of inventory to Jones Ltd. Johnson Ltd recorded a $40,000 profit before tax on this transaction. Jones Ltd has one-quarter of the inventory still on hand at the end of the financial year.

 

ii)             On 25 June 2020, Jones Ltd declared a dividend of $40,000. On the same day Johnson Ltd declared a $20,000 dividend.

 

iii)           On 1 December 2019, Johnson leased surplus office space to Jones, at a rental payment of $18,000 per month. Rent is payable half-yearly in advance, on 1 December and 1 June each year.

 

Requirement:

Prepare the Consolidation Journal entries for the financial year ended 30 June 2020.

Answer rating: 100% (QA)

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