Parker Corporation owns 90 percent of Straw Company\'s voting shares. During 201
ID: 2573701 • Letter: P
Question
Parker Corporation owns 90 percent of Straw Company's voting shares. During 2013, Parker produced 25 computer desks at a cost of $100 each and sold 20 desks on credit to Straw for $120 each. Straw sold 15 of the desks to unaffiliated companies for $200 each prior to December 31, 2013, and sold the remainder in early 2014 for Parker for 20 percent of the 20x3 purchases. $180 each. Both companies use perpetual inventory systems. At December 31, 2013 Straw still owed (12 Points) he consolidated income statement for 2013? What amount of cost of goods sold must be reported in t Prepare all the consolidation elimination entries for 2013 a. b.Explanation / Answer
a. out of 25 goods produced only 15 are sold to outside entities, hence cost of goods sold to be reported= 15*100= 1500
b.
workings:
Debit Credit Sales-parker 2400 Cost of goods sold-parker 2000 Cost of goods sold-straw 300 Inventory- straw 100 [intercompany sale elimination entry] Debit Credit Accounts payable 480 Accounts receivable 480 [Intercompany balances elimination] [20% of purchases= 20*120*20%]