Rachel Ltd owns all the share capital of Green Ltd. The income tax rate is 30%. During the period ended 30 June 2023, the following transactions took place.

(a) Green Ltd sold inventories costing $75 000 to Rachel Ltd. Green Ltd recorded a $15 000 profit before tax on these transactions. At 30 June 2023, Rachel Ltd has none of these goods still on hand.

(b) Rachel Ltd sold inventories costing $12 000 to Green Ltd for $27 000. By 30 June 2023, onethird of these were sold to Willow Ltd for $14 250 and one-third to Layla Ltd for $13 500; the rest are still on hand with Green Ltd. Willow Ltd and Layla Ltd are external entities.

(c) On 1 January 2023, Rachel Ltd sold land for cash to Green Ltd at $30 000 above cost. The land is still on hand with Green Ltd.

(d) Green Ltd sold a warehouse to Rachel Ltd for $150 000 on 1 July 2022. The carrying amount of this warehouse recognised by Green Ltd at the time of sale was $123 000. Rachel Ltd charges depreciation at a rate of 5% p.a. on cost.

Required In relation to the above intragroup transactions:

1. prepare adjusting journal entries for the consolidation worksheet at 30 June 2023

2. explain in detail why you made each adjusting journal entry.

Answer rating: 100% (QA)

No adjusting Entry is required Explanation 1Rachel Ltd has none of the goods still on hand that means entire profit of 15000 has been actually relaize... View the full answer