Nordway Corporation acquired 90 percent of Olman Companys voting shares of stock in 20X1. During 20X4, Nordway

Question:

Nordway acquired 90 percent of Olman Company’s voting shares of stock in 20X1. During 20X4, Nordway purchased 40,000 Playday doghouses for $24 each and sold 25,000 of them to Olman for $30 each. Olman sold all of the doghouses to retail establishments prior to December 31, 20X4, for $45 each. Both companies use perpetual inventory systems.

Required
a. Give the journal entries Nordway recorded for the purchase of inventory and resale to Olman Company in 20X4.
b. Give the journal entries Olman recorded for the purchase of inventory and resale to retail establishments in 20X4.
c. Give the worksheet elimination entry(ies) needed in preparing consolidated for 20X4 to remove all effects of the intercompany sale.

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