Reconciling Intercompany Accounts The following entries are reflected in the intercompany ac¬

counts of a parent and its subsidiary for June 2006:

Parent's Intercompany Receivable/Payable 6/1 Balance .

$50,000 6/4 Inventory sale . 17,000 10,000 . 6/3 Remittance 2,000 . 6/7 Collection of subsidiary's 6/15 Advertising allocation at 40% customer receivable of $15,000 incurred . 6,000 6/29 Inventory sale . 14,000 6/30 G & A allocation .

7,000 6/30 Balance . $82,000 Intercompany Subsidiary's Receivable/Payable

$50,000 . 6/1 Balance 6/2 Remittance . 10,000 17,000 . 6/9 Inventory purchase 600 .

6/17 Advertising allocation 6/28 Return of defective inventory .

5,000=

$52,600 .

6/30 Balance

® The parent's cost of inventory sold to the subsidiary is always 60% of the transfer price.

Required 1. Prepare a schedule to reconcile the intercompany accounts.

. Prepare the adjusting entries to bring the accounts into balance.