(a) Pinta Company owns 90% of the common stock of Simplex Company. Simplex Company sells merchandise to Pinta Company at 25% above cost. During 2019 and 2020 such sales amounted at $700,000 and $1,100,000, respectively. At the end of each year, Pinta Company had in its inventory one-fourth of the amount of goods purchased from Simplex Company during that year.

Required:

Prepare, in general journal form, all entries necessary on the 12/31/2020 consolidated statements workpaper to eliminate the effects of intercompany sales.

(b) Patsy Company sells merchandise to Simon Company at a markup of 30% of selling price. During 2019 and 2020 such sales amounted to $300,000 and $480,000, respectively. At the end of each year, Simon Company had in its inventory one-tenth of the amount of goods purchased from Patsy Company during that year.

Required:

Prepare, in general journal form, all entries necessary on the 12/31/2020 consolidated statements workpaper to eliminate the effects of intercompany sales.

(This is how the question is given to us I believe the change name is referring to the same companies. P=Parent S=Subsidiary)