In preparing the consolidation workpaper for Bolger Corporation and its 60 percent owned subsidiary, Feldman Company, the following eliminating entries were proposed by the bookkeeper for Bolger Corporation:

The bookkeeper for Bolger recently graduated from Oddball University, and while the dollar amounts recorded are correct, he had some confusion in determining which accounts needed adjustment. All of the intercorporate sales in 20X5 were from Feldman to Bolger, and Feldman sells inventory at cost plus 40 percent of cost. Bolger uses the equity method in accounting for its ownership in Feldman.
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a. What percentage of the intercompany inventory transfer was resold prior to the end of 20X5?

b. Give the appropriate eliminating entries needed at December \(31,20 \times 5\), to prepare consolidated financial statements.

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E(1) Cash 80.000 Accounts Payable 80,000 To eliminate the unpaid balance for intercorporate inventory sales in 20X5. E(2) Cost of Goods Sold 12.000 Income from Subsidiary 12,000 To eliminate unrealized inventory profits at December 31, 20X5. E(3) Income from Subsidiary 140,000 Sales 140.000 To eliminate intercompany sales for 20X5.